Regarding Current Assets and Fixed Assets, Basic Financial Management Knowledge

Financial calculations are a crucial aspect of running a business. In carrying out financial calculations, there is one important component for the smooth running of the business and the sustainability of the company, namely assets.

The term asset usually appears in business financial report. Good or bad company's financial performance can be judged from its assets. Therefore, companies need to maintain the availability of assets as well as possible.

Definition of Assets

Assets are all forms of wealth owned by a business entity such as a company. Wealth is a resource in the form of objects or rights, which can be used for business activities, such as operations, financing, or investment.

The resource itself is generated by the company from business activities or transactions within a certain period. For example, purchases, receivable contracts, investments, issuance of shares, to bank loan transactions.

Asset Type: Current Assets and Fixed Assets

In a business, the types of assets or assets vary. These include current assets, tangible fixed assets and intangible fixed assets. Here's the explanation.

Current asset

Current assets or current-assets is a type of asset that is expected to be cashed immediately, in less than one accounting cycle. Some of them are included in current assets, including:

• Cash, namely assets that are in the company's cash or the equivalent of cash stored in banks.
• Accounts receivable, namely claims from a business entity to debtors. caused by selling products on credit.
• Securities, namely ownership of shares or bonds of other companies, which are temporary in nature or can be resold at any time.
• Revenue receivables, namely income that has become a right, but has not been received.
• Notes receivable, namely a billing order to individuals or entities, in order to make payments according to the due date.
• Prepaid expenses are expenses that are paid in advance, but have not become liabilities at that time.
• Equipment, which is goods that are used in a business and have consumable properties.
• Merchandise inventory is goods purchased for resale.

Fixed assets

Fixed assets or fixed assets divided into two types, namely tangible and intangible. Here's the explanation.

1. Tangible Fixed Assets

This type of fixed asset is an asset owned by a business entity whose period of use is more than one year. Every year, tangible fixed assets depreciate in value and must be calculated in the books.

Tangible fixed assets are used for business operations and are not sold. Its nature can be seen, its shape can be measured, and it can be touched. For example, such as buildings, machinery, land, office equipment, transportation equipment and so on.

2. Intangible Fixed Assets

This type of intangible fixed asset is an asset of a business entity in the form of special rights belonging to the company and has value, but does not have a physical form. Companies can also benefit from it because the asset can indeed be cashed.

Some examples that are included in intangible fixed assets, among others:

• Copyright is the sole right obtained by a person or entity from the government as a result of the work.
• Patent rights are the sole rights granted by the government to individuals or groups because of certain inventions.
• good will, namely the company's surplus value due to certain privileges.
• Franchise, namely a privilege received by an individual or entity from another party to commercialize a particular technique, product or formula.
• Lease rights, namely the right to use the other party's fixed assets within a pre-agreed period.

These various types of assets can provide benefits to the company, either directly or indirectly. The benefits are productive and related to business operations, such as reducing cash disbursements and paying off company obligations.