Are Short Term Investments Current Assets? | Finance Strategists

Yes, prepaid expenses are generally considered to be a current asset.

Current assets are any assets that can be converted into cash within a period of one year. This counts products that are sold for cash as well as resources that are consumed, used, or exhausted through regular business operations that are expected to provide a cash value return within a single year. 

Prepaid expenses are funds that have been spent preemptively on goods or services to be received in the future, freeing up capital to be used later. They are not very liquid because they cannot be easily converted to cash. However, since the goods received from a prepaid expense are often used within a year, they are still considered a current asset. Payments to insurance companies or contractors are common prepaid expenses that count towards current assets.