Types of Assets
There are various ways to categorize assets, but here are four commonly recognized types of assets:
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1.Current assets: Current assets are assets that can be converted into cash within one year or the operating cycle of the business, whichever is longer. Examples include cash, accounts receivable, inventory, and prepaid expenses.
2.Fixed assets: Fixed assets are long-term assets that are used to generate revenue over a period of time, usually longer than one year. Examples include property, plant, and equipment (PP&E), such as buildings, machinery, and vehicles.
3.Intangible assets: Intangible assets are non-physical assets that provide value to a business but do not have a physical presence. Examples include patents, trademarks, copyrights, and goodwill.
4.Financial assets: Financial assets are investments that generate income for a business, such as stocks, bonds, and other securities. These assets are typically held for the purpose of generating income or capital gains, rather than for use in the operations of the business.
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