Assets in Accounting
- Cash and Cash Equivalents
- Cash Equivalents
- Restricted Cash
- 3 Types of Inventory | Raw Material
- Current Assets
- FIFO vs LIFO
- First In First Out (FIFO)
- Last in First Out (LIFO)
- Non-Current Assets
- Accounts Receivables?
- Accounts Receivables Factoring
- Allowance for Doubtful Accounts
- Accrued Revenue
- Liquid Assets
- Marketable Securities on the Balance Sheet
- Prepaid Expenses
- Tangible vs Intangible Assets
- Net Tangible Assets
- Tangible Assets
- Salvage Value
- Residual Value
- Fixed Capital vs Working Capital
- Impariment of Assets
- Negative Goodwill
What are Assets in Accounting?
Assets in accounting are the overall assets owned by the company and are usually found on the left-hand side of the balance sheet. Types of Assets in accounting include the Current Assets and Long-Term Assets. Current Assets are expected to consumed, sold or converted into cash within one business year and it includes the cash and cash equivalents, inventory, accounts receivables, marketable securities etc. However, the long-term assets include the property plant and equipment, intangible assets and goodwill.
Top topics that we discuss in the section on Assets in accounting are as follows -
- What are the types of Assets in Accounting?
- What is included in cash and cash equivalent (along with its list)
- What is Restricted Cash?
- What are the types of Inventory (Raw Material, Work in Progress and Finished Goods Inventory)
- Inventory Valuation using First in First Out (FIFO) and Last in First Out (LIFO)
- What is accounts receivables factoring and how it is useful?
- What is an allowance for doubtful accounts?
- What are accrued revenues and why it is an asset?
- What are prepaid expenses and why it is classified as Assets in Accounting?
- What are Tangible Assets and Intangible Assets in Accounting?
- What is the concept of Goodwill and negative goodwill?
Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand and demand deposits.
Cash equivalents are held for the purpose of meeting short-term cash commitments for investment or other purposes and are an important source of liquidity.
Restricted cash is that portion of cash which is set aside for a specific purpose and is not available for general business use on an immediate basis.
3 Types of Inventory
Inventory means those current assets, which have been or will be converted into the final products of a company for sale in the near future.
Current assets in accounting are expected to be consumed, sold, or converted into cash either in one year or in the operating cycle, whichever is longer.
FIFO vs LIFO
FIFO stands, First Out which implies that the inventory which was added first to the stock will be removed from stock first, whereas LIFO stands, First Out which implies that the inventory which was added last to the stock will be removed from the stock first.
First In First Out (FIFO)
FIFO stands for First In, First Out which implies that the inventory which was added first to the stock will be removed from stock first.
Last in First Out (LIFO)
LIFO is one of the methods of accounting of inventory value on the balance sheet.
Non-Current Assets in Accounting
Non-Current Assets are basically long-term assets having bought with the intention of using them in the business.
Accounts Receivables is money that is owed to the company by the customers (credit to the customers.
Accounts Receivables Factoring
Accounts Receivable Factoring is also known by the name of Invoice Factoring.
Allowance for Doubtful Accounts
Allowance for doubtful accounts primarily means creating an allowance for the estimated part of the accounts that may be uncollectible and will become bad debt.
Accrued revenue is a part of sale which has been recognized by the seller but not yet been billed to its customer.
Liquid assets in accounting are assets that can be transformed into cash rapidly, with negligible effect on the price available in the entire market.
Marketable Securities on the Balance Sheet
Marketable securities are the financial instrument than can be easily bought and sold on a stock exchange within a short period of time.
Prepaid expenses in accounting are those expenses which are to be incurred in future but the amount for the same has already been paid in advance.
Tangible vs Intangible Assets
Tangible asset is something which has physical existence and a certain economic value, whereas Intangible Asset which are not existing visually but poses certain economic life and value.
Net Tangible Assets
Net tangible assets is an accounting term, also alternatively known as net asset value or book value.
Tangible Assets in accounting are any physical assets owned by a company which can be quantified with relative ease are usually known as tangible assets.
Salvage value is the value of an asset after its useful life is over.
Residual value is defined as the estimated scrap value of an asset at the end of its lease or its economic or useful life.
Fixed Capital vs Working Capital
Fixed capital is the investments done by the business for accruing long-term benefits, whereas Working capital is the daily requirement pumped into the business.
Impariment of Assets in Accounting
Impairment of Assets is done only when events and circumstances indicate that the recovery of the carrying value might not be possible through future use.