Have Mudalovers ever heard of the term assets? Assets are divided into two types, namely fixed assets and current assets. This asset is very important for entrepreneurs or in a business.
Why are assets important? So these assets have an important role in the sustainability of a business. Assets are assets or property of a company which of course without assets, the business process cannot run. Without assets, this means that the company does not have the capital to restart the business, pay employee wages, procure goods, pay taxes, and other needs needed to support the business.
These assets have several types which are divided based on their form. What types of assets are these? Come on, learn more by reading this mudabicara.com article !
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Types of Assets
It has been explained previously that the assets and assets referred to in assets are not only money, but can also be goods such as cash registers or others.
Then machines, money, patents fall into which type of assets? Read the explanation below to find out the types of assets.
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Current Assets or Current Assets
The first type of assets are current assets, namely assets that can be turned into or converted into money within a short period of time. In general, this disbursement process takes under one year.
From the disbursement process, it can be said that an asset is an asset that must be available or available at all times for the company. The following are some examples of types of current assets:
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What
Cash is included in the type of current assets because cash is assets that are in the form of money and then stored in a safe place such as a bank account.
The company can then withdraw the cash at any time as long as the company needs it for the smooth and easy performance of the company.
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Securities
Assets included in securities are assets in the form of shares or bonds and are then purchased by the company. This type of property can also be liquidated at any time by selling it.
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Account receivable
Companies that use credit transactions when selling their products or services will usually have accounts receivable. These trade receivables can be collected by the company and become money. Apart from offering products with credit, companies can also use them as collateral when they need a loan.
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Revenue receivables
Apart from trade receivables, companies can also have income receivables, namely income from the company that has been previously determined, but has not been paid by the party who is obliged to pay it.
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Notes receivable
The next example of current assets is notes receivable, namely letters containing collections from other companies or even certain institutions that have a due date.
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Prepaid expenses
What is prepayment expense? This asset is an asset belonging to the company in the form of expenses that have been paid at an early date, before the payment period expires.
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Supplies or equipment
Equipment is property used by a company in operational activities, such as the production of goods and services offered to customers. This equipment is generally used and used up only once.
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Merchandise stock
Merchandise stock is an asset in the form of merchandise purchased and stored for a certain period of time. Then, these goods are resold in the following period.
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Long Term Investment or Long Term Investment
Assets can also be used as assets in the long term. For example, a company can buy shares of another company. By using this type of asset, the company aims to obtain high profits in the future.
However, to achieve these profits, companies must be patient and wait. Apart from that, this investment is also included in the high risk, high return category, so companies need to choose the right investment in order to achieve the expected profits.
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Fixed Assets or Fixed Assets
According to the Indonesian Accountants Association, this asset is a type of tangible asset that is owned for use in the production or provision of goods or services to be rented to other parties, or for administrative purposes and is expected to be used for more than one period.
According to Lukas Atmaja, manufacturing companies tend to have quite high amounts of fixed assets compared to other service companies. This is because manufacturing companies have many machines to support company activities, land and buildings.
Meanwhile, companies operating in the service sector, such as banking, tend to have a higher amount of current assets than fixed assets. This is because their products are cash, securities and deposits which require fast liquidity.
So, it can be said that fixed assets are a type of asset that has a useful life of more than one year, is not intended for sale, and is used in company operations.
Examples include machines, buildings, land, office equipment, etc. Apart from these two types of assets, there are also intangible fixed assets and long-term investments.
Tangible fixed assets are a type of asset that can be seen, its shape can be measured and can be touched by someone. Assets included in tangible fixed assets are machines. buildings, office equipment and others.
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Intangible Fixed Assets or Intangible Fixed Assets
Intangible fixed assets are a type of fixed asset that does not have a visible physical form, but has significant value for the company. Even though they are intangible, these assets can still provide financial benefits to the company because they can be monetized.
Some examples of intangible fixed assets include the following:
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Goodwill
Goodwill is the added value that a company has because it has achieved certain performance or has features that differentiate it from other companies.
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Copyright
Copyright is a right obtained by a company when it produces a product. When the company sells the product, the company will receive payment for the copyright that has been purchased.
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Patent
Patents are rights granted to companies for their inventions in a particular field. The company will also receive payments when other companies use the invention.
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Rental rights
Rental rights are rights given to a company to use fixed assets owned by another party for a certain period of time in accordance with the agreement.
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Franchise
A franchise is a right given to a company when its products are purchased by another company or individual, and the company will receive payment in return. However, companies also have a responsibility to help other parties build businesses similar to theirs.
So, at this point, do Mudalovers understand the explanation of assets? Furthermore, Mudalovers can read the book Accounting Assets = Debt + Capital. In this book, Mudajual will learn about the characteristics of accounting and companies.
Apart from that, material will also be presented about financial reports, what activities occur in the accounting cycle such as recording, adjustments and others. Interested in starting to learn? Read only at mudabicara.com !
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Definition of Assets
Before discussing types of assets, Mudalovers must of course know the definition of assets first. What is meant by assets?
The definition of assets is the various types of wealth or assets owned by a company. This wealth could have existed since the company was first built or be the result of business being carried out by the company at a certain time period. These assets or wealth can be calculated or valued using money.
In business, the assets in question can include machines, cash, inventory and property. Meanwhile, intangible assets include royalties, patents and intellectual property which are recorded on the financial balance sheet.
According to the Big Indonesian Dictionary (KBBI), the definition of assets is assets, whether in the form of money or other objects that can be valued using money or tangible intangibles such as patents.
Meanwhile, assets is a term commonly used to create financial reports. An entrepreneur must be familiar with the term for these assets.
Because entrepreneurs will often deal with financial reports. It is also said that a good company is a company that is able to manage its assets well.
This can of course be seen from how the company manages its assets, so that these assets and assets will be able to produce optimal profits for the company.
So, an asset can be concluded as an asset that is not only stored, but the company will make the asset ‘work’ for the sustainability of the company.
However, managing these assets also requires careful calculations. Because if it is wrong, the company could be threatened with losing its wealth or assets.
For this reason, a company’s finances can be said to be good or bad based on the company’s assets. Because of this, the company will try to maintain asset availability properly.
In general, these assets are divided into four types, including current assets, fixed assets, long-term investments and intangible fixed assets.
From the explanation above, do Mudalovers understand what assets are? These assets will usually be calculated or analyzed by an accountant, therefore assets are discussed in accounting material.
Do you want to become an accountant or start learning to calculate Mudalovers’ property and business assets ? Study the material in the book Accounting for Assets, Debt & Capital Ed 2. In this book, Mudalovers will learn about asset, liability and capital items.
Properties of Assets
From the four types of assets and their definitions, can Mudalovers conclude what characteristics assets have? One of the characteristics of assets is that they have physical and non-physical forms such as intangible fixed assets. There are also other characteristics of assets, namely as follows:
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Physical and Non-Physical Forms of Assets
Assets have physical and non-physical properties. Physical assets include assets that can be seen and felt, such as machinery, labor, inventory, property, cash, and so on.
On the other hand, assets with a non-physical nature refer to intangible ownership, examples of which are patents, intellectual property, royalties, and others.
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Obtained Through Economic Activities or Transactions in the Past
Assets are resources obtained from economic activities that occurred in the past. Every economic transaction carried out by the company in the past will affect its current situation, including accumulated assets. Additional assets generally occur through obtaining profits, grants, and other factors.
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Owned or Controlled by a Company or Organization
Another characteristic of assets is ownership or control by a company in order to produce higher value.
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Provides Benefits in the Future
Furthermore, one of the characteristics of assets is that they provide benefits in the future. Assets must have productive properties that can increase cash flow and reduce debt.
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Loanable
Lastly, the nature of assets is their ability to be lent to other parties. These assets can be transferred to another company or entity without changing the ownership status of the owner company.
However, assets obtained through loans will be recorded in the balance sheet as assets and liabilities.
Management accounting has a role as a method of financial analysis that can link financial information with activities that occur in management’s physical activities, so that a picture of intensity will emerge.
This is necessary, so that the company does not lose assets due to losses that may be experienced in the future.
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Examples of Assets
If Mudalovers listened carefully from the beginning of the article, then of course Mudalovers already knows several examples of assets, right? One of them is the machines used in factories.
Why is a machine an asset? Because machines are assets that will help the production process of goods to be sold. If a machine stops, employees or the company also need additional people to replace the work of the machine.
Not only that, machines that stop working can also hamper the production process, causing losses for the company. Apart from machines, what are other examples of assets?
- Trade receivables: Trade receivables are payment bills that must be received by the company due to non-cash sales of goods.
- Securities: Securities can be bonds or company shares. The company has the ability to sell it if necessary for the company’s interests. The advantage of these securities is their ability to be traded again, like shares, or cashed out if they are deposits.
- Revenue receivable: Revenue receivable is revenue that should have been received by the company, but cash payment has not been received.
- Prepaid Expenses: Payments made in advance for certain expenses, but not yet recognized as a liability in that period.
- Equipment: All equipment that is used to run a business and has the property of being used up.
- Merchandise Inventory: Goods purchased for the purpose of resale in the hope of making a profit.
Thus the discussion regarding the types of assets which are divided into four. Want to learn about accounting and become an expert accountant? Don’t forget to read regularly and practice using quality accounting books!