An asset of an entity is a present economic resource to which the entity has a right or other access that others do not have.
There are two types of assets:
1. Current assets
2. Non-current assets
Current
assets are cash and other assets expected to be converted to cash or consumed
either in a year or in the operating cycle (whichever is longer), without
disturbing the normal operations of a business.
Examples:
- Cash and cash equivalents
- Short term investment
- Receivables
- Inventory
- Prepaid expenses
Non-current assets are those which cannot be converted into cash within a year or in the operating cycle (Whichever is longer).
Examples:
- Investment
- Goodwill
- Property, Plant & Equipment (PPE)
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