In business and accounting, assets are economic resources owned by business or

company. Anything tangible or intangible that one possesses, usually considered as

applicable to the payment of one's debts is considered an asset. Simplistically stated,
assets are things of value that can be readily converted into cash (although cash itself is
also considered an asset).[1] The balance sheet of a firm records the monetary[2] value of
the assets owned by the firm. It is money and other valuables belonging to an individual
or business. [3] Two major asset classes are tangible assets and intangible assets. Tangible
assets contain various subclasses, including current assets and fixed assets.[4] Current
assets include inventory, while fixed assets include such items as buildings and
equipment.[5] Intangible assets are nonphysical resources and rights that have a value to
the firm because they give the firm some kind of advantage in the market place.
Examples of intangible assets are goodwill, copyrights, trademarks, patents and computer
programs,[5] and financial assets, including such items as accounts receivable, bonds and
stocks.

[edit] Asset characteristics

Assets have three essential characteristics:

The probable present benefit involves a capacity, singly or in combination with

other assets, in the case of profit oriented enterprises, to contribute directly or
indirectly to future net cash flows, and, in the case of not-for-profit organizations,
to provide services;
The entity can control access to the benefit;
The transaction or event giving rise to the entity's right to, or control of, the
benefit has already occurred.

It is not necessary, in the financial accounting sense of the term, for control of assets to
the benefit to be legally enforceable for a resource to be an asset, provided the entity can
control its use by other means.
It is important to understand that in an accounting sense an asset is not the same as
ownership. Assets are equal to "equity" plus "liabilities."
The accounting equation relates assets, liabilities, and owner's equity:
Assets = Liabilities +Stockholder's Equity(Owners' Equity)
The accounting equation is the mathematical structure of the balance sheet.
Assets are listed on the balance sheet. Similarly, in economics an asset is any form in
which wealth can be held.
Probably the most accepted accounting definition of asset is the one used by the
International Accounting Standards Board [6]. The following is a quotation from the IFRS
Framework: "An asset is a resource controlled by the enterprise as a result of past events
and from which future economic benefits are expected to flow to the enterprise." [7]
Assets are formally controlled and managed within larger organizations via the use of
asset tracking tools. These monitor the purchasing, upgrading, servicing, licensing,
disposal etc., of both physical and non-physical assets.[clarification needed] In a company's

balance sheet certain divisions are required by generally accepted accounting principles
(GAAP), which vary from country to country.

[edit] Current assets

Main article: Current asset
Current assets are cash and other assets expected to be converted to cash, sold, or
consumed either in a year or in the operating cycle. These assets are continually turned
over in the course of a business during normal business activity. There are 5 major items
included into current assets:
1. Cash and cash equivalents it is the most liquid asset, which includes
currency, deposit accounts, and negotiable instruments (e.g., money orders,
cheque, bank drafts).
2. Short-term investments include securities bought and held for sale in the near
future to generate income on short-term price differences (trading securities).
3. Receivables usually reported as net of allowance for uncollectable accounts.
4. Inventory trading these assets is a normal business of a company. The
inventory value reported on the balance sheet is usually the historical cost or fair
market value, whichever is lower. This is known as the "lower of cost or market"
rule.
5. Prepaid expenses these are expenses paid in cash and recorded as assets
before they are used or consumed (a common example is insurance). See also
adjusting entries.
The phrase net current assets (also called working capital) is often used and refers to the
total of current assets less the total of current liabilities.

[edit] Long-term investments

Often referred to simply as "investments". Long-term investments are to be held for many
years and are not intended to be disposed in the near future. This group usually consists
of four types of investments:
1. Investments in securities, such as bonds, common stock, or long-term notes.
2. Investments in fixed assets not used in operations (e.g., land held for sale).
3. Investments in special funds (e.g., sinking funds or pension funds).
Different forms of insurance may also be treated as long term investments.

[edit] Fixed assets

Main article: Fixed asset
Also referred to as PPE (property, plant, and equipment), these are purchased for
continued and long-term use in earning profit in a business. This group includes land,
buildings, machinery, furniture, tools, and certain wasting resources e.g., timberland and
minerals. They are written off against profits over their anticipated life by charging
depreciation expenses (with exception of land). Accumulated depreciation is shown in the
face of the balance sheet or in the notes.

These are also called capital assets in management accounting.

[edit] Intangible assets

Main article: Intangible asset
Intangible assets lack physical substance and usually are very hard to evaluate. They
include patents, copyrights, franchises, goodwill, trademarks, trade names, etc. These
assets are (according to US GAAP) amortized to expense over 5 to 40 years with the
exception of goodwill.
Websites are treated differently in different countries and may fall under either tangible or
intangible assets.

[edit] Tangible assets

Tangible assets are those that have a physical substance, such as equipment and real
estate.
A liability is a debt assumed by a business entity as a result of its borrowing activities or
other fiscal obligations (such as funding pension plans for its employees). Liabilities are
paid off under either short-term or long-term arrangements. The amount of time allotted
to pay off the liability is typically determined by the size of the debt; large amounts of
money usually are borrowed under long-term plans.
Payment of a liability generally involves payment of the total sum of the amount
borrowed. In addition, the business entity that provides the money to the borrowing
institution typically charges interest, figured as a percentage of the amount that has been
lent.
A company's liabilities are critical factors in understanding its status in any industry in
which it is involved. As John Brozovsky noted in Journal of Commercial Lending, "a
basic understanding of accounting for liabilities is necessary to assess the viability of any
company. Companies are required to follow certain accounting rules; however, the rules
allow considerable flexibility in how a company accounts for liabilities."
By the late 1990s, it was even possible within the rules for companies to hide liabilities
from investors and analysts. For example, according to Gretchen Morgenson in Forbes,
some banks and investment firms routinely transfer some of their positions to another
entitysuch as a hedge fundfor a week or so at the end of their quarterly accounting
periods through a combination derivative and repurchase agreement. In exchange for
holding the liabilities, the second firm receives an amount 25 to 30 basis points over the
interest rate on the transferred securities. Although such transactions are legal,
Morgenson asks whether financial firms "should be spending shareholders' money to hide
things from shareholders."

CURRENT LIABILITIES
Current liabilities are short-term financial obligations that are paid off within one year or
one current operating cycle, whichever is longer. (A normal operating cycle, while it
varies from industry to industry, is the time from a company's initial investment in

inventory to the time of collection of cash from sales of that inventory or of products
created from that inventory.) Typical current liabilities include such accrued expenses as
wages, taxes, and interest payments not yet paid; accounts payable; short-term notes;
cash dividends; and revenues collected in advance of actual delivery of goods or
services.
Economists, creditors, investors, and other members of the financial community all
regard a business entity's current liabilities as an important indicator of its overall fiscal
health. One financial indicator associated with liabilities that is often studied is known as
working capital. Working capital refers to the dollar difference between a business's total
current liabilities and its total current assets. Another financial barometer that examines a
business's current liabilities is known as the current ratio. Creditors and others compute
the current ratio by dividing total current assets by total current liabilities, which provides
the company's ratio of assets to liabilities. For example, a company with $1.5 million in
current assets and $500,000 in current liabilities would have a three to-one ratio of assets
to liabilities.

LONG-TERM LIABILITIES
Liabilities that are not paid off within a year, or within a business's operating cycle, are
known as long-term or noncurrent liabilities. Such liabilities often involve large sums of
money necessary to undertake opening of a business, conduct a major expansion of a
business, replace assets, or make a purchase of significant assets. Such debt typically
requires a longer period of time to pay off. Examples of long-term liabilities include
notes, mortgages, lease obligations, deferred income taxes payable, and pensions and
other postretirement benefits.
When debt that has been classified as long-term is paid off within the next year, the
amount of that paid-off liability should be reported by the company as a current liability
in order to reflect the expected drain on current assets. An exception to this rule, however,
comes into effect if a company decides to pay off the liability through the transfer of
noncurrent assets that have been previously accumulated for that very purpose.

CONTINGENT LIABILITIES
A third kind of liability accrued by companies is known as a contingent liability. The term
refers to instances in which a company reports that there is a possible liability for an
event, transaction, or incident that has already taken place; the company, however, does
not yet know whether a financial drain on its resources will result. It also is often
uncertain of the size of the financial obligation or the exact time that the obligation might
have to be paid.
Contingent liabilities often come into play when a lawsuit or other legal measure has
been taken against a company. An as yet unresolved lawsuit concerning a business's
products or services, for example, would qualify as a contingent liability. Environmental
cleanup and/or protection responsibility sometimes falls under this classification as well,
if the monetary impact of new regulations or penalties on a company is uncertain.
Companies are legally bound to report contingent liabilities. They are typically recorded
in notes that are attached to a company's financial statement rather than as an actual part

of the financial statement. If a loss due to a contingent liability is seen as probable,

however, it should be included as part of the company's financial statement.

In finance, current liabilities are considered liabilities of the business that are to be
settled in cash within the fiscal year or the operating cycle, whichever period is longer.
For example, accounts payable for goods, services or supplies that were purchased for
use in the operation of the business and payable within a normal period of time would be
current liabilities.
Bonds, mortgages and loans that are payable over a term exceeding one year would be
fixed liabilities or long-term liabilities. However, the payments due on the long-term
loans in the current fiscal year could be considered current liabilities if the amounts were
material.
The proper classification of liabilities is essential when considering a true picture of an
organization's fiscal health.
Retrieved from "http://en.wikipedia.org/wiki/Current_liability
ASSETS
Current Assets
Cash and cash equivalents
Accounts receivable (debtors)
Inventories
Prepaid Expenses
Investments held for trading
Other current assets
Fixed Assets (Non-Current Assets)
Property, plant and equipment
Less : Accumulated Depreciation
Goodwill
Other intangible fixed assets
Investments in associates
Deferred tax assets
LIABILITIES and EQUITY
Creditors: amounts falling due within one year (Current Liabilities)
Accounts payable
Current income tax liabilities
Current portion of bank loans payable
Short-term provisions
Other current liabilities
Creditors: amounts falling due after more than one year (Long-Term
Liabilities)
Bank loans
Issued debt securities
Deferred tax liability
Provisions
Minority interest

Equity
Share capital
Capital reserves
Revaluation reserve
Translation reserve
Retained earnings

There are three types of accounts which are as follows.

(1).Personal A/c:- it relates to any person (e.g.
individual,any artificial person like company,firm,an
institute etc.)
This may be further classified:Natural Personal A/c:-it relates with natural person e.g.
Raj,sachin,Mohit etc.
Artificial Personal A/c:-It relates with artificial person
e.g. company,club,and bank etc.
Representative Personal A/c:-It represent the other person
e.g. Outstanding Salary A/c,Prepaid Exp. A/c,wages
outstanding A/c.etc.
Rule:- Dr.the receiver and Cr.the giver.
(2).Real A/c:-It relates to any assets.
e.g.land,building,machinery,furniture & fixture etc.
it relates to "TANGIBLE" as well as "INTANGIBLE" assets.
Tangible Assets:- Which can be touch & seen. e.g
Land,Building Furniture etc.
Intangible Assets:- Which can't be touch & seen e.g
Goodwill,Patent,Trademarks etc.
Rule:- Dr.what comes in and Cr.what goes out.
(3).Nominal A/c:-It realtes to expenditure & incomes. e.g.
Rant,Wages,Traveling Exp. Salaries etc.
Rule:- Dr.all Expenses & Losses and Cr.All Incomes &
gains.