Question
Write a note on types of Assets with one example of each.
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Answer
Assets in the Balance Sheet are divided into two parts as follows:
- Fixed Assets: Fixed Assets are those assets that are acquired for continued use and not for resale. They may be tangible assets like land, building, plant and machinery, furniture and fixtures, etc., or intangible assets like goodwill, patents, etc.
- Tangible Fixed Assets are those fixed assets which can be seen and touched, e.g., Land and Building, Plant and Machinery, Furniture, etc.
- Intangible Fixed Assets are those fixed assets which are not in a physical form, i.e., they can neither be seen nor touched, e.g, goodwill of a firm or the know-how which it possesses, patents, trademarks, coputer software, etc.
- Current Assets: Thssets: These are the assets of business which are held for reslae or for converting into cash. These are the assets which are likely to be realised within a period of one year or during the period of normal operating cycle. A business earns profit by sale of these assets but not by keeping them in hand. Examples are unsold goods, debtors, bills receivalbe, bank balance, cash in hand, etc. These assets are temporary in nature and may change from time to time. These are sometimes referred to as floating or circulating assets.
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