Assets

Define the term 'assets'.

• Assets refer to debts owed by an individual or entity.

• Assets are only physical items like buildings and machinery.

• Assets are liabilities that decrease in value over time.

• Assets are resources with economic value owned by an individual or entity.

What are non-current assets?

• Current assets that can be easily converted to cash within a year.

• Short-term investments that are liquidated within six months.

• Non-current assets are long-term assets that are not expected to be liquidated within one year.

• Assets that are expected to be sold within the next month.

What are current assets?

• Current assets are long-term investments held for more than five years.

• Current assets include only physical goods and inventory.

• Current assets are liabilities that need to be paid within a year.

• Current assets are assets expected to be converted into cash or used up within one year.

Explain the difference between current and non-current assets.

• Current assets are investments held for more than a year, while non-current assets are cash equivalents.

• Current assets are short-term assets expected to be liquidated within a year, while non-current assets are long-term assets not expected to be liquidated within a year.

• Current assets include all types of property, while non-current assets are only financial instruments.

• Current assets are always tangible items, while non-current assets are intangible.

List three examples of current assets.

• Real Estate

• Equipment

• Cash, Accounts Receivable, Inventory

• Long-term Investments

Why are current assets important for a business?

• Current assets are only important for tax purposes.

• Current assets are not relevant for cash flow management.

• Current assets are important for maintaining liquidity and supporting daily operations.

• Current assets are primarily used for long-term investments.

What is capital in a business context?

• Capital is the financial resources or assets used by a business to fund its operations and growth.

• Capital is the total revenue generated by a business.

• Capital refers to the physical location of a business.

• Capital is the number of employees in a company.

Give two examples of non-current assets.

• Cash and Cash Equivalents

• Inventory

• Accounts Receivable

• 1. Property, Plant, and Equipment (e.g., buildings, machinery); 2. Intangible Assets (e.g., patents, trademarks)

How do intangible fixed assets differ from tangible assets?

• Intangible fixed assets differ from tangible assets in that they are non-physical and provide long-term value, whereas tangible assets are physical items.

• Intangible fixed assets are short-term investments.

• Tangible assets provide no long-term value.

• Intangible assets are always physical items.

Why is it important to appreciate intangible fixed assets?

• It is important to appreciate intangible fixed assets because they significantly contribute to a company's value and competitive advantage.

• Intangible fixed assets are less important than tangible assets in business operations.

• They are only relevant for tax purposes and not for overall valuation.

• Intangible fixed assets have no impact on a company's financial statements.