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"The entire property of all kinds possessed by or
owing to a person or organisation is called assets".
"Assets are valuable resources owned by a business and
acquired at a measurable money cost". Following are different types of assets:
- Fixed Assets: These are those assets, which are
acquired for relatively long periods for carrying on the
business of the enterprise. Such assets are not meant for
resale. For example, Land and Building, Plant and Machinery
etc.
- Current Assets: These assets are also termed as
‘Floating or Circulating Assets’. Such assets are acquired
with the intention of converting them into their values
constantly. The essential difference between ‘Current Assets’
and ‘Fixed Assets’ is that the current assets are held essentially
for a short period and they are meant for converting into
cash. Unsold stock, debtors bills receivables, bank balance,
cash in hand, etc are some of the examples of current assets.
According to the Institute of Chartered Public Accountants,
U.S.A., "Current Assets include cash and other assets
or resources commonly identified as those which are reasonably
expected to be realised in cash or sold or consumed during
the normal operating cycle of the business.
- Fictitious Assets: Assets of no real value but
included in the balance sheet for legal or technical reasons,
e.g., preliminary expenses.
- Tangible and Intangible Assets: Tangible assets
are those assets, which can be seen and touched i.e. assets
having their physical existence e.g. land and building,
plant and machinery, furniture and fixtures, stock-in-trade,
cash, etc. Intangible assets cannot be normally sold in
the open market since they are not having any physical existence
e.g. goodwill, patents, trade marks, prepaid expenses etc.
- Liquid Assets: Assets that can be easily converted
into cash like Bank account, Bills receivables, etc. As
a matter of fact, all current assets excluding stock-in-hand
and prepaid expenses are called liquid assets.
- Wasting Assets: These are the assets which are
exhausted with, or which lose themselves in, the goods they
produce. Mines and quarries are common examples of such
assets. Copyright, patents, trademarks, etc. are also classified
as wasting assets since they get exhausted with the lapse
of time.
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