To explain: Commercial paper shows up either as a current asset or a current liability on the corporate balance sheet.
Introduction:
Commercial paper:
It is a short-term debt instrument, which is issued by one corporation to another for the exchange of inventories or any accounts payable that the issuing company owes to the issued company. It’s a risky instrument as it is not backed up by any sort collateral and is not registered under Security and Exchange Commission, until it is issued under 270 days.
Current assets:
These are assets which can be converted into cash & cash equivalents within a financial year.
Current liability:
Current liabilities are liabilities which are obligated to be paid off within a financial year by the company.
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Foundations of Financial Management
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