Everyone has assets in their life and in business life. Assets in the business are like the blood in the human being. Assets are important in the business and no business can work without assets. Assets have different types according to their work and need.
There are two types of assets. Fixed assets and current assets. Assets are easily converted into cash but not all types of assets can be done so.
Assets work in day to day business life and operate day to day business activates. Assets are stock or inventories too which can easily show in the market when the demand for the particular good is high. Assets are also non-tangible goods.
Fixed assets are those assets which are not easily converted into cash, it requires more than a year to convert into cash. Fixed assets are tangible and intangible.
Fixed assets are more expensive as compare to current assets. Fixed assets cannot help in the business when the demand for the product is high and you have to increase the supply of the product.
Fixed assets can get on the lease. Fixed assets are depreciated annually and it is important to find the cost of the deprecation.
Assets Vs Fixed Assets
There are some differences between assets and fixed assets.
- Fixed assets are the part of Assets
Assets have two types, fixed assets, and current assets. Fixed assets are part of the assets. Assets can be converted into cash easily within a month, but fixed assets cannot be converted easily. All the balance sheets represent the assets and liabilities and the fixed assets have their own specific part in the balance sheet.
- Period of time
Assets are for both the short and long period of time. It can operate the business for a long time as well as for a short time too. It can also operate the day to day activates and also the activities of the years too. Fixed assets are just for a long period of time i.e. more than years. They cannot work in the day to day business.
- Depreciation and cost of depreciation
Assets are deprecated depending upon their types. Deprecation is actually applied to goods having work of life for more than a year. All those assets having lifetimes less than a year, deprecation cost is not applicable. However, in fixed assets, depreciation cost is a must except land. Fixed assets are deprivable with the passage of time.
- Converted into cash
All the assets are converted into cash but some assets are easily converted into cash and some are not. Those assets which can easily convert into cash are called current assets which are the type of assets. While fixed assets cannot easily be converted into cash, it’s required more than a year.
- Inventories or stock
Inventory called stock is an important and essential part of the business. Inventory helps when the demand of the product increases rapidly and to handle this increment, the stock is supplied into the market. Inventory is the assets but not the fixed assets. Fixed assets cannot help like assets.
- Use of assets and fixed assets
Assets and Fixed assets also differ by their uses. Assets are used for both short and long term period while fixed assets cannot be used for a short period of time.