Finance | Assets - Meaning and Types

 What is an Asset? what are the Assets Types?

What is an asset in business ?

What is an Asset?

Assets are the items your company owns that can provide future economic benefit.

What are the types of Assets?

Assets are classified based on liquidity. Liquidity means how quickly an asset can be turned into cash.

1- Fixed Assets - illiquid (non-liquid) assets: 

These are assets owned by the company but need longer than a year to be converted to cash. They include company cars, real estate, machinery, coverage towers for telecom companies, buildings, furniture, office equipment, etc. They contribute to the income, but they are not consumed in the income generating process.

2- Liquid Assets:

Liquid assets are those assets that can be turned into cash and be used immediately to pay liabilities in your balance sheet. Common liquid assets include: cash, certificates of deposit, stocks, precious metals (and they can be both liquid and fixed based on how you store them and their availability and type.).

3- Current Assets - short-term resources:

The assets which can be converted into cash within a year from the date it was included in the organization's bookkeeping record. They include :
Cash, marketplace securities, debt claims, stock, supplies, prepaid costs, inventory, accounts receivable.

4- Noncurrent Assets - long-term assets:

They are considered long-term, where their full value won't be recognized until at least a year. They are also considered long-term investments. They are classified as any asset which is not classified as current. They include: 
Land, Long-term investments, Property, Plant and Equipment (PP&E), Trademarks, … .

Now that we know the term "Assets" and "Assets types", we need to know a connected term which is "Liabilities" and "Liabilities types." and this is the next post in our Accounting & Finance Page.

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