Know about assets and their types

The valuable things owned by the business are known as assets. In other words, anything which will enable a business enterprise to get cash or a benefit in future is an asset. Thus, cash and bank balances, stock, furniture, machinery, land and building, bills receivable, money owing by debtors etc. are all assets.

According to prof. R.N. Anthony, "Assets are valuable resources owned by a business which are acquired at a measurable money cost"
Types of Asset :

1. Fixed Asset :  Acquired for long term use or for continued use in the business .Not meant for sale.These assets increase the profit earning capacity of the business. Expenditure on these assets is not regular in nature. Land and building, machinery, vehicles, furniture etc. are some of the example of fixed asset.
2. Current Asset :  which can be converted into cash within one year. Assets which are meant for sale like stock or which the management would want to convert into cash within one year. Debtors, stock, bills receivable, prepaid expenses, cash in hand or at bank, short term investments etc. are some of the example of current asset. Also known as floating assets or circulating assets as the amount and nature of such assets keeps changing continuously.
3. Fictitious Asset : which do not have physical form. Do not have any real value, so they are written off in future. examples: loss on issue of shares, advertising expense, preliminary expense etc.
4. Tangible Assets : They have physical existence which can be seen and touched. example: furniture, stock , cash, equipment.
5. Intangible assets : They cannot be seen and touched but their importance can be felt like goodwill and patents.they may be purchased and sold in special circumstances.
6. Wasting Assets: They are those assets whose value goes on declining with the passage of time. example: mines, patents and asset taken on lease
7. Liquid Assets : refers to convertibility in cash. they can be converted into cash in short time.Example : cash in hand or at bank,debtors and bills receivable.