CLASSIFICATION OF ASSETS :

(i) Fixed Assets are those which are acquired for long use in the business itself and not for resale. For example, plant and machinery, land and buildings, furniture and fixtures, patents and trade marks are examples of fixed assets.

(ii) Current or Floating Assets are those that are meant to be converted into cash as soon as possible. Stock of goods, amount due from customers to whom goods have been sold on credit and balance at bank are examples of current (or floating) assets.

(iii) Liquid Assets are those current assets which are already in the form of cash or which can be readily converted into cash, such as Government Securities.

(iv) Wasting Assets are those fixed assets which have a fixed content, like coal in a coal mine; the value of the asset goes down as the contents are taken out. When the minerals have been taken out totally, the mine will become useless.

(v) Intangible Assets are those fixed assets which cannot be seen or touched or felt. Goodwill (the value of one’s name) is an intangible asset because there is no physical form to show it. Intangible assets are not necessarily useless.

(vi) Fictitious Assets are valueless assets but shown as assets in the financial statements (such as useless trade marks) or expenses treated as assets (such as expenses incurred to establish a company i.e. preliminary expenses).