What do you mean by an asset and what are different types of assets?
What do you mean by an asset and what are different types of assets?
Assets are economic resources of an enterprise that can be expressed in monetary terms. Assets are items of value used by the business in its operations. e.g., Super Bazaar owns a fleet of trucks, which is used by it for delivering foodstuffs; the trucks, thus, provide economic benefit to the enterprise. This item will be shown on the asset side of the balance sheet of Super Bazaar. Assets can be broadly classified into two types
(i) Fixed Assets: Fixed assets are those assets which last for a long period of time or the benefit of these assets are availed considerably long period i.e., more than a year. In this way, fixed assets are assets held on a long-term basis, such as land, buildings, machinery, plant, furniture and fixtures. These assets are used for the normal operations of the business.
(ii) Current Assets: Current assets are those assets which get converted into cash within an operating cycle generally one year. In this way, current assets are assets held on a short-term basis such as debtors (accounts receivable), bills receivable (notes receivable), stock (inventory), temporary marketable securities, cash and bank balances.
Assets are economic resources of an enterprise that can be expressed in monetary terms. Assets are items of value used by the business in its operations. e.g., Super Bazaar owns a fleet of trucks, which is used by it for delivering foodstuffs; the trucks, thus, provide economic benefit to the enterprise. This item will be shown on the asset side of the balance sheet of Super Bazaar. Assets can be broadly classified into two types
(i) Fixed Assets: Fixed assets are those assets which last for a long period of time or the benefit of these assets are availed considerably long period i.e., more than a year. In this way, fixed assets are assets held on a long-term basis, such as land, buildings, machinery, plant, furniture and fixtures. These assets are used for the normal operations of the business.
(ii) Current Assets: Current assets are those assets which get converted into cash within an operating cycle generally one year. In this way, current assets are assets held on a short-term basis such as debtors (accounts receivable), bills receivable (notes receivable), stock (inventory), temporary marketable securities, cash and bank balances.
