Accounting: Step by Step Guide to Accounting Principles & Basic Accounting for Small business by Mark Smith

Author:Mark Smith
Language: eng
Format: epub, pdf
Tags: accounting principles, accounting theory, accounting information, accounting for small business, accounting fundamentals, accounting tools for business, bookkeeping and taxes
Publisher: Mark Smith
Published: 2018-10-03T00:00:00+00:00

What Are the Different Types of Assets?

Next, we need to take a look at some of the assets that the company needs to keep track of. Remember that these assets are going to help the company do its normal operations. There are two types of assets that each business will need to pay attention to including current assets and non-current assets.

Current Assets

Current assets are going to be any that the company owns that have a lifespan that is a year or less. This means that the asset has to be easily changed over to cash if the company needs to. Such assets will include inventory, accounts receivable, and cash or cash equivalents.

Cash, which is the most fundamental and most commonly thought about the current asset, can also include checks and bank accounts that are not restricted. Cash equivalents are going to be assets that are very safe, but which can also be turned into cash quickly if the company needs. The U.S. Treasury is a good example of this. And then there are the accounts receivables, which are going to show the reader any of the obligations that customers and others owe to the company over the short-term. These sometimes happen if a company allows the customer to use credit to purchase the product or service.

Inventory is an important current asset as well. Inventory can include things like the raw materials to make a product, the products that are still in the process of being created, and the finished goods. Each company is going to be different, and the exact way that the inventory account looks is going to be different. For a manufacturing firm, there may be a lot of raw materials, but a retained firm wouldn’t have any raw materials.

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