How to classify the asset on the balance sheet

The  asset  is the set of assets and rights and other resources that a company has to carry out its activity and thereby obtain benefits or economic returns in the future. But how to classify the asset on the balance sheet ?

We will see, therefore, the components in which an asset is shelled. The asset is defined as the sum of current assets and the fixed assets of a company. In turn, the realizable asset plus the available asset is called current assets and, in fixed assets, it is also called fixed assets.

Balance Classification

Real asset = fixed asset + current asset

Fixed assets = fixed assets

Current assets = realizable assets + available assets

The assets are taken into account according to their  degree of liquidity ,  being ordered from lowest to highest. Therefore, the items that make up the balance sheet are as follows:

  1. Immobilized:

They are the elements in the assets of a company that will remain in it for at least one year. They are part of the company and contribute to its production.

There are four types of fixed assets:

  • Material: Formed by long-term assets, which are tangible such as land, machinery, furniture.
  • Fixed assets in progress :Those who are in the phase of adaptation, construction or assembly.
  • Intangible :Long-term assets that are not physical such as research papers, patents, trademarks.
  • Financial assets:Investments made by the company through shares, obligations of other companies, public agents…. It can be permanent or temporary. If they remain more than one year, they are permanent, and their objective is to obtain long-term benefits, tax exemptions, control other companies … On the contrary, if they remain for less than one year, they will be temporary and will aim to achieve liquidity and profitability in the short term.
  1.  Realizable:

Are those assets that in the short term and in a short time will become liquidity taking into account all commercial effects and invoices pending collection. There are two groups of realizable:

  • Stock: All the company’s finished products, raw materials and in the process of transformation.
  • Debtors: Invoices pending collection or receivables, bills …
  1. Available:

It is the immediate money that is in banks or in the cashier of the company.

The company has other assets, such as its constitution studies, notary studies and company constitution expenses.

Finally, mention that the  real asset or tangible is less liquid than a financial asset , because if we want to sell a house or a car is more tedious than pushing a button on our investment platform and sell a title , deposited the amount of the operation in our cash account and liquidating very quickly.

by Abdullah Sam
I’m a teacher, researcher and writer. I write about study subjects to improve the learning of college and university students. I write top Quality study notes Mostly, Tech, Games, Education, And Solutions/Tips and Tricks. I am a person who helps students to acquire knowledge, competence or virtue.

Leave a Comment