To put assets into a class is simply grouping them into different investment types. Assest categorized in similar gropus or class will have almost same characteristics and will behave in same manner in marketplace. There are dofferent types of asset classes, just have a look.
Types of Asset Classes
So what does an asset class mean? When the balance sheet of a company reflects assets, they need to be categorized into different classes on the basis of when they will be used. Resources that are expected to be used within the current period falls into the category of current assets while resources that expected to be used in future periods are termed as non-current assets. Another category of resources is known as intangible assets. There resources typically consist of intellectual property. Resources that don’t fit into any of these three classes are simply called other assets.
Current Assets
Cash and equivalents – Any currency that is possessed by the business can be termed as cash. It could be cash in a register, money in the bank or treasure bills in a safe deposit box. These liquid assets can be used to buy any other resource, settle debts or pay investors.
Accounts Receivable – Accounts receivable is an IOU from a customer. Many businesses let their customers to purchase goods on account and pay for it later. Accounts receivable is the acknowledgement that the customer owes the company money for the goods.
Inventory – Inventory is merchandise that the company can sell for a profit. This merchandise could be purchased or manufactured by the company.
Investments – Investments that management intends to sell in the current period are considered current resources. These investments typically consist of stocks and bonds.
Long-Term Assets
Land – Property or land is considered to be a long-term resource because it will be used over time and not any time soon in the current period.
Buildings – A building is obviously a resource used over time. Many companies operate in the same building for quite long. Therefore, it is termed as a long-term resource.
Equipment – Equipments are basically resources that can be used for more thana year like machinery, vehicles and furniture.
Intangible Assets
Patents, Trademarks and Copyrights are good examples of intellectual property that a company can own or control to generate revenues over time. In fact, some of the most valued assets in the world are intangible in nature. Walt Disney’s Mickey Mouse or Samsung’s gaalxy phone designs.
Types of Asset Classes
So what does an asset class mean? When the balance sheet of a company reflects assets, they need to be categorized into different classes on the basis of when they will be used. Resources that are expected to be used within the current period falls into the category of current assets while resources that expected to be used in future periods are termed as non-current assets. Another category of resources is known as intangible assets. There resources typically consist of intellectual property. Resources that don’t fit into any of these three classes are simply called other assets.
Current Assets
Cash and equivalents – Any currency that is possessed by the business can be termed as cash. It could be cash in a register, money in the bank or treasure bills in a safe deposit box. These liquid assets can be used to buy any other resource, settle debts or pay investors.
Accounts Receivable – Accounts receivable is an IOU from a customer. Many businesses let their customers to purchase goods on account and pay for it later. Accounts receivable is the acknowledgement that the customer owes the company money for the goods.
Inventory – Inventory is merchandise that the company can sell for a profit. This merchandise could be purchased or manufactured by the company.
Investments – Investments that management intends to sell in the current period are considered current resources. These investments typically consist of stocks and bonds.
Long-Term Assets
Land – Property or land is considered to be a long-term resource because it will be used over time and not any time soon in the current period.
Buildings – A building is obviously a resource used over time. Many companies operate in the same building for quite long. Therefore, it is termed as a long-term resource.
Equipment – Equipments are basically resources that can be used for more thana year like machinery, vehicles and furniture.
Intangible Assets
Patents, Trademarks and Copyrights are good examples of intellectual property that a company can own or control to generate revenues over time. In fact, some of the most valued assets in the world are intangible in nature. Walt Disney’s Mickey Mouse or Samsung’s gaalxy phone designs.
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