Classification of Assets
Asset: Assets refer to the resources owned by the business, which are utilized in the course of the business to generate revenue.
In accounting, the assets are classified into two categories:
Current Assets: Current assets are the assets that are easily convertible to cash within a year of business operations. For example, cash and cash equals, Account receivables, Inventories, Prepaid Expenses.
Non-current Assets: It indicates to the assets otherwise known as fixed assets, that are held by the concern for more than one year and are not meant to be sold in the near future rather held to generate profits. It is classified into two categories:
- Intangible Assets: It refers to the assets that have physical existence that can be seen, felt and touched. For example, property, furniture, and machinery.
- Tangible Assets: It refers to the assets that does not have any physical existence and cannot be seen, felt or touched. For example, patents, copyrights, and
goodwill .
To Identify: The following items as (a) current asset or (b) property, plant and equipment.
Want to see the full answer?
Check out a sample textbook solutionChapter 4 Solutions
Working Papers, Chapters 1-17 for Warren/Reeve/Duchac's Accounting, 26th and Financial Accounting, 14th
- Property, Plant, and Equipment is considered why type of asset? A. current assets B. contra assets C. tangible assets D. intangible assetsarrow_forwardWhich of the following accounts would be included in the property, plant, and equipment category of the classified balance sheet? a. Land held for investment b. Accumulated Depreciation c. Office Supplies d. Mortgage Payablearrow_forwardWhich of the following accounts would be included in the property, plant, and equipment category of the classified balance sheet? Land held for investment Accumulated Depreciation Office Supplies Mortgage Payablearrow_forward
- The usual order for the asset subgroups of a classified balance sheet is: a. Long-term investments, current assets, plant assets, intangible assets. b. Current assets, prepaid expenses, long-term investments, intangible assets. c. Intangible assets, current assets, long-term investments, plant assets. d. Current assets, long-term investments, plant assets, intangible assets.arrow_forwardWhich of the following accounts would be classified as a fixed (property, plant and equipment asset)? Group of answer choices equipment accounts receivable cash accounts payablearrow_forwardIntangible assets are often combined with_______________assets for measurement and recognition in the financial statements. a.Tangible b.Quick c.All the options d.Currentarrow_forward
- What is the order in which assets are generally listed on a classified balance sheet? A) Current; property, plant, and equipment; intangible assets; long-term investments B) Current; long-term investments; property, plant, and equipment; intangible assets C) Current and long-term D) Current; property, plant, and equipment; long-term investments; intangible assetsarrow_forwardDefine current assets. What basis is used for ordering individual items within the current assets section? How do current liabilities differ from long-term liabilities?arrow_forwardExpenditures to acquire long-term assets are most likely classified as a. Personnel Services b. Maintenance and Other Operating Expenses c. Financial Expenses d. Capital Outlaysarrow_forward
- What financial statement are property, plant, and equipment reported on, and how?arrow_forwardWhich of the following accounts would be classified as a fixed (property, plant and equipment asset)? cash accounts receivable accounts payable equipmentarrow_forwardWhich of the following should be disclosed in the Summary ofSignificant Accounting Policies?a. rent expense amount b. maturity dates of long-term debtc. methods of amortizing intangiblesd. composition of plant assetsarrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage LearningPrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeAuditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning