Current assets (vlottende activa)
Current assets are assets that are consumed, sold or collected in the normal cycle, including inventories, receivables and cash and cash equivalents.
What do current assets (vlottende activa) mean?
Current assets are assets that are consumed, sold or collected in the normal cycle, including inventories, receivables and cash and cash equivalents.
The classification does not mean everything is available in cash tomorrow. Old inventory and doubtful receivables can reduce value and liquidity. Assess both classification and collectability.
How does it work?
According to art. 2:364(1) DCC, current is any asset that does not serve the activity on a lasting basis. Paragraph 3 names the groups: inventories, receivables, securities, cash and cash equivalents and, insofar as not stated under receivables, prepayments and accrued income.
The valuation rule is stricter than for fixed assets. Current assets are valued at current value as soon as that is lower than the acquisition or production cost on the balance sheet date (art. 2:387(2) DCC). If a receivable is outstanding for more than a year, you state that amount (art. 2:370(2) DCC).
Example
A trading BV has at 31 December: inventory at purchase price € 25,000, accounts receivable € 18,000, prepaid rent € 2,000 and bank € 7,000. At closing, a batch of € 3,000 turns out to be saleable for only € 1,000 and a customer with € 2,500 outstanding has been declared bankrupt. Inventory: 25,000 − 2,000 = € 23,000. Accounts receivable: 18,000 − 2,500 = € 15,500. Current assets: 23,000 + 15,500 + 2,000 + 7,000 = € 47,500 instead of € 52,000. The difference of € 4,500 is a cost of the financial year.
In the annual accounts
Assets side of the balance sheet, all size classes.
Difference from cash and cash equivalents
Cash and cash equivalents are cash, bank balances, bills of exchange and cheques (art. 2:372(1) DCC): one component of current assets. The rest still has to become money, inventory through sale and receivables through collection. Whoever reads current as available overestimates the payment capacity: in the example only € 7,000 of € 47,500 can be withdrawn directly.
Common mistakes
- Confusing current with liquid
- Showing uncollectable receivables at full value
What to watch for
- Prepare an ageing analysis of the receivables and assess the oldest items one by one.
- Check whether balances are freely available; a blocked account or a balance serving as security is disclosed (art. 2:372(2) DCC).
- A micro entity shows one amount of current assets (art. 2:395a(4) DCC). A small entity shows the groups of art. 2:364(3) without further breakdown (art. 2:396(3) DCC). Medium-sized and large entities also specify the types of receivables; see receivables in the annual accounts.
Legal basis and sources
art. 2:369–372 DCC
Frequently asked questions
Does a receivable with a term longer than a year belong to current assets?
That depends on the purpose. A trade receivable remains current, stating the part outstanding for more than a year. A loan granted on a lasting basis belongs to financial fixed assets.
Is an overdrawn bank account a current asset?
No. That balance is a debt to the bank and belongs on the liabilities side. Offsetting against a credit balance on another account is not simply allowed (art. 2:363(2) DCC).
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Preparing Dutch annual accounts?
Your first set of annual accounts is free, for every size class. Create an account and prepare the annual accounts of your Dutch company under Title 9 of Book 2 of the Dutch Civil Code.
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