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14 10 2007

Know The Components in The Asset Side Of A Balance Sheet(Part3of3)

Posted by: slang in b. Financial Statements
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[GO TO THE MAIN PAGE FOR ALL ARTICLES ON THE BASIC UNDERSTANDING OF FINANCIAL STATEMENTS] 

In earlier Part 1, we define what is the Balance Sheet and Part 2 dealt with some of the components of the asset side of a balance sheet. In this final part, we see further detailed explanation of the component of the assets side of a Balance Sheet:

WHAT ARE FIXED ASSETS?

Fixed Assets are unlike current assets:

 

  • Which are NOT expected to be realised or held for trading or sale

 

  • The costs of the fixed assets are allocated over the period of the useful lives to generate the income associate with it. This follows closely to the matching concept.

 

  • Examples of Fixed Assets are:
  • Property
  • Plant & machinery
  • Motor Vehicles
  • Furniture & Fixtures
  • Air-conditioners
  • Office Rennovations

 

 

WHAT ARE LONG TERM INVESTMENTS?

 

Long Term investments are:

 

  • investments a company intends to hold for more than one year. Consist of stocks and bonds of other companies, real estate, and cash that has been set aside for a specific purpose or project.

 

  • also consist of the stock in a company’s affiliates and subsidiaries.

 

 

The difference between Short Term and Long Term investments lie in the company’s motive for owning them.

 

Short term investments consist of stocks, bonds, etc. a company has bought and will sell shortly. The investments made under long term investments may never be sold

 

 

WHAT ARE INTANGIBLE ASSETS?

 

Intangible assets:

have no physical existence and a long life. They include patents, copyrights, trademarks, etc.

 

 

SUMMARY: TO RECAP FOR ASSET SIDE OF THE BALANCE SHEET

 

Balance Sheet And Its Assets Side (Total Assets) consists of :

Current Assets+ Fixed Assets +Long Term Investments + Intangible Assets

 

This entry was posted on Sunday, October 14th, 2007 at 11:16 am and is filed under b. Financial Statements. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

One Response to “Know The Components in The Asset Side Of A Balance Sheet(Part3of3)”

  1. Snapshot Of Articles Covered In The Heading Of Financial Statements | MBA Accounting says:
    March 16th, 2008 at 11:05 pm

    […] Know And Understand The Components In  The Asset Side Of The Balance Sheet (Part2)    […]

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