Assets (Balance Sheet)

Balance Sheet

1.) Assets 

Assets in a company are everything the company owns that has value and can help generate revenue. They are used to run the business and can be tangible (physical) or intangible (non-physical). In short, assets are valuable resources that support a company's operations and growth.

Types of Assets:

  1. Current Assets – Easily converted to cash within a year 

  1. Cash and Cash Equivalents

  • Physical cash on hand

  • Bank balances (checking and savings accounts)

  • Short-term, highly liquid investments like Treasury bills and money market funds

  • These are the most liquid assets and can be used immediately to meet obligations.

  1. Accounts Receivable

  • Money owed to the company by customers for goods or services delivered on credit

  • Typically collected within 30–90 days

  • May include trade receivables and notes receivable due within a year

  1. Inventory

  • Goods and materials that are held for sale or used in production

  • Includes:

    • Raw materials – items used in manufacturing

    • Work-in-progress (WIP) – partially finished goods

    • Finished goods – ready for sale

  1. Marketable Securities

  • Short-term investments that can easily be converted into cash

  • Examples: stocks, bonds, or mutual funds intended to be sold within a year

  • Must be liquid and have a known market price

  1. Prepaid Expenses

  • Payments made in advance for goods or services to be received in the future

  • Common examples:

    • Rent paid in advance

    • Insurance premiums

    • Subscriptions and software licenses

  • These are considered current assets because they reduce future cash outflows

  1. Short-Term Loans and Advances

  • Loans given to employees, suppliers, or others, expected to be repaid within one year

  • Can also include advances to vendors or affiliate

  1. Interest Receivable

  • Interest income that has been earned but not yet received

  • Typically applies to interest on short-term investments or loans

  1. Tax Refunds Receivable

  • Amounts expected to be received from tax authorities due to overpayment or tax credits

  • Usually received within the next fiscal year

  1. Dividends Receivable

  • Dividends declared by other companies in which the business holds shares

  • Expected to be paid in the near future


  1. Non-Current Assets – Long-term assets used over time (e.g., property, equipment, patents).

  1. Property, Plant, and Equipment (PP&E): Tangible, physical assets used in the company’s operations over many years

  • Land

  • Buildings

  • Machinery

  • Vehicles

  • Office furniture and fixtures
    ** Subject to depreciation (except for land)

  1. Long-Term Investments: Investments intended to be held for more than one year

  • Stocks and bonds not expected to be sold in the short term

  • Investments in other companies (equity stakes or subsidiaries)

  • Real estate held for investment, not operations

  1. Intangible Assets: Non-physical assets that provide long-term value

  • Patents

  • Trademarks

  • Copyrights

  • Brand names

  • Customer list

  • Non-compete agreements
    **Usually amortized over their useful life

  1. Goodwill:
    The excess value paid during the acquisition of another business over its fair market value that arises when a company acquires another company for more than the net assets’ worth

  2. Deferred Tax Assets
    Taxes overpaid or accounting losses that can reduce future tax liability. Commonly arise from timing differences between accounting income and taxable income
    Recognized when it’s probable that future taxable profit will be available

  3. Other Long-Term Assets: Assets that don’t fit into the above categories but are not expected to be used or converted to cash within a year

  • Long-term receivables

  • Security deposits

  • Prepaid expenses that cover more than one year