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An asset that a lender accepts as security for a loan. In event that the borrower defaults on their loan payments, the lender can seize the collateral and resell it to recoup the losses suffered.
Current assets are assets which remain in a business only a short time or change over time. A good example would be raw materials purchased for manufacture, which would be used up in a production process and replaced.
Current liabilities are amounts owed by a business to others that are payable within one year at the end of an accounting period. There are several different types of items which could be included in current liabilities, but trade payables, accruals and short-term loans are common examples.