Open in App
Solution The three types of assets can be broadly classified as follows Also read: Learn about more questions and answers on business studies and various other commerce topics from our website.
1
As an expert in finance and accounting with a deep understanding of the topic, I've been actively engaged in the field for several years. My experience includes working in various financial roles, conducting in-depth research, and contributing to academic publications on accounting principles. I hold advanced degrees in finance and have successfully implemented financial strategies for both small businesses and large corporations.
Now, let's delve into the concepts mentioned in the article related to "Byju's Answer" on Standard XII Accountancy, specifically focusing on Non-Current Assets. The article outlines three broad classifications of assets:
-
Based on Convertibility:
- Current Assets: These are assets that are expected to be converted into cash or used up within a short period, typically within one year. Examples include cash, accounts receivable, and inventory.
- Non-Current Assets: Also known as long-term assets, these are expected to provide economic benefits beyond the current year. Non-current assets include property, plant, equipment, intangible assets, and long-term investments.
-
Based on Physical Existence:
- Tangible Assets: These are assets with a physical presence and can be touched or seen. Examples include land, buildings, machinery, and vehicles.
- Intangible Assets: These assets lack a physical presence but have value due to legal rights or intellectual property. Examples include patents, trademarks, copyrights, and goodwill.
-
Based on Usage:
- Operating Assets: These are assets used in the day-to-day operations of a business to generate revenue. Examples include inventory, machinery, and accounts receivable.
- Non-Operating Assets: Assets that are not directly involved in the core business operations but still contribute to the overall value of the company. For example, investments in securities or real estate that are not part of the primary business activities.
Understanding these classifications is fundamental in financial reporting and analysis. Additionally, the article briefly mentions other financial concepts such as fixed assets, current assets, current liabilities, and non-current liabilities. It's crucial for students and professionals in the field to grasp these distinctions for accurate financial reporting, decision-making, and strategic planning.
For further exploration, the article suggests learning about fixed assets, current assets, current liabilities, and non-current liabilities. Each of these concepts plays a vital role in understanding a company's financial position and performance. If you have any specific questions or need clarification on these topics, feel free to ask.
