Assets in the Balance Sheet are divided into two parts as follows :
1. Fixed Assets : Fixed Assets are those assets that are required 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 and Fixtures , etc .,
- Intangible Fixed Assets are those assets which are not in a physical form, i.e., they can neither be seen nor touched , e g., Goodwill of a firm the know - how which it possesses , patents , trade - marks , etc .
Examples
Note : Fixed assets are valued at cost less depreciation .
Distinction between Tangible Assets and Intangible Assets
Investments* : Investments are capital expenditure incurred on purchase of shares , debentures , bonds , etc ., to earn interest, divided and other benefits .
*Investments is shown separately in the Balance Sheet .
There is another category of assets called Fictitious Assets . In the real sense , they are losses yet to be written off. Examples of Fictitious assets are Advertisment Suspense Account , Discount on Issue of Debentures , Profit and Loss Account ( Debit Balance ) , etc .
2. Current Assets : These are those assets of the business which are held for resale 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 receivable , 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 .
Examples
Distinction between Fixed Assets and Current Assets
0 Comments