Other current assets is a default classification of "current asset" general ledger accounts that does not include the following major current assets:
- Marketable securities
- Accounts receivable
- Prepaid expenses
These major accounts are not included in the other current assets classification, because they are itemized individually on the balance sheet, and typically contain material amounts that should be tracked separately.
Some assets are recorded so rarely, or are so immaterial, that they are not accorded a separate "major" account within the general current assets classification. For these reasons, the net balance in the other current assets line item is typically quite small. If the account grows to material proportions, this may mean that it contains one or more assets that should be reclassified into "major" current assets, and be itemized separately in their own accounts.
Examples of other current assets are:
- Cash surrender value of life insurance policies
- Advances paid to suppliers
- Advances paid to employees
Since these residual accounts are current assets, their contents must be convertible into cash within one year or one business cycle.
Accounts included in the other current assets classification are aggregated for presentation in a single line item in the balance sheet.
If the ending balance in the other current assets line item becomes significant, it may make sense to shift some of the balance into a separate line item that is more specifically identified, so that the reader of a balance sheet will have a better comprehension of the nature of the recorded items.
It can make sense to focus an accounting procedure on the periodic investigation of this account, to see if any items should no longer be recorded as assets. Otherwise, they may linger on the balance sheet for years, and be subject to an audit adjustment.