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Cash

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Cash is the amount of actual money a business has at its disposal. It is classified on the balance sheet as a current asset, meaning it is likely to be used within the next 12 months, and is usually held in bank accounts.

Because cash does not have to be converted into another form to be used, it has the highest liquidity of all assets and is therefore highly valued.

Companies can generate cash by selling products from inventory, converting accounts receivable to cash, selling assets or by raising more cash from owners.

More about cash

Assets are listed on the balance sheet in decreasing order of liquidity, with cash appearing at the top of the list. In the example below, ABC Co. had $5,000 in cash as of March 31, 2012.

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