Assets can be divided into three different groups - fixed or non-current, current assets and investments
- Fixed/Non-current Assets: Value remains the same for a long period of time, at least for longer than 1 year. The accounts that are part of fixed assets are:
- Land and buildings/Property: When the business owns the building from where they are doing business.
- Vehicles: All cars, delivery trucks, etc. belonging to the business.
- Equipment: The shelves, cash registers, refrigerators, etc. used in the business.
The second one is the group of assets where the value changes from day to day. The value does not stay the same for a long period like that of the fixed assets. This group is called current assets. Current meaning the value at that specific time.
The accounts that are part of current assets are:
- Stock: Initial/opening or final/closing stock, depending on when the unsold goods are written up in the books of the business
- Cash: All the cash money (notes and coins) which the business has on its premises, petty cash and cash float excluded.
- Bank: All the money which the business has in its current/cheque account. (favourable balance.)
- Petty cash: The cash which is held in the business by a petty cashier to pay for small cash expenses, e.g. for milk for teatime, for stamps, etc.
- Cash float: The money in the cash register with which the cashier starts every day
- Debtors: People who bought on credit from the business and owe money for goods bought.
- Accrued income: At the end of the financial period when the business has not received all the money which is owed, it is still outstanding.
- Prepaid expenses: Also at the end of the financial period, but it indicates that some of the expenses for the next financial period have already been paid.
The last group of assets is investments. An investment refers to extra funds/money which you do not need to run the business. This money is then taken and invested or put it away in a bank account for a certain period of time which can be from 3 months up to 48 months. You earn interest on this money, but are not able to use it until the investment has matured. This means that the value of this asset also remains the same for a certain period of time.