Assets may be classified in many ways. The principal distinction normally made for business purposes is between:
In the balance sheet of a company certain divisions are required by law, which varies from country to country.
Current assets
Those are assets continually turned over in the course of a business during normal business activity. Examples: debtors, stock, cash and work in progress. The phrase net current assets (also callled working capital) is often used and refers to the total of current assets less the total of current liabilities.
Fixed assets
Assets which are purchases for continued and long-term use in earning profit in a business. Examples: land, buildings, machinery, etc. They are written off against profits over their anticipated life by charging an annual amount calculated so as to eliminate the original cost (historical cost), less scrap value, over that period. (see depreciation).
See also: Financial markets, Finance, Liability, Property
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