Question

5. Explain the difference between current, fixed and intangible assets. Give two examples of each of these different types of assets.

Answer 1

• Current Assets

--These are those asset that will be converted into cash in coming near future. The cash is to be realized from them in the coming short period of time.

--They are the most ‘liquid’ form of Assets.

--On Balance Sheet, they are shown before any other Assets.

--EXAMPLE: Cash, Inventory, Accounts receivables

• Fixed Assets

--These are the Long term Assets, that are not generally for resale purpose.

--Most of them are used directly or indirectly in the production or working of the organisation.

--They are mostly of considerable amount and are acquired at considerable cost.

--These Assets have physical characteristics and can be easily identified.

--EXAMPLE: Land, Building, Equipment

• Intangible Assets

--As the name suggest, these assets are intangible in the sense that these cannot be seen or touched and have no

‘physical’ attributes.

--EXAMPLE: Goodwill, Patents, TradeMark