Assets is a term that refers to the enterprise property or to economic means. Under the term of property it is understood the sum of all things, cash, receivables and other property values belonging to entrepreneur and they are used for the business. Assets are funds controlled by the enterprise for which it is assumed will bring the company future economic benefit.
The basic aspect of the assets classification is their time utilization or difficulty to convert them into cash (liquidity).
- Long Term (Fixed) assets - investment property. This is a property which is used for more than 1 year)
- Current assets - they are in the enterprise in the short-term, in kind or in monetary form)
- Other assets - transitional assets
Ownership structure of the enterprise depends on:
- Technical demands of the production - it affects mainly the proportion of permanent fixed assets and possibly intangible assets and investment property (know-how, patents, etc.)
- Degree of development of money and capital market - it affects the share of financial assets
- Economic situation of the enterprise and the orientation of its economic policy
Use of the assets in practice: Any business requires assets. They are used in the manufacturing or providing services. It can be converted into other assets, used to discharge liabilities or split between the owners of the enterprise. Assets represent the left side of the balance equation. This balance is called the balance sheet.
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