Accounting and Payroll

Assets accounting

Every family owns some assets. The simplest examples for the illustration of assets include a home or apartment for living, a car to travel or a telephone or computer for communication. There are also other types of assets in flats or houses such as furniture, carpet, washing machine, appliances or television. Even money, whether in form of cash or deposited in a bank, can be considered an asset.

Just as every family owns some assets, other entities such as hospitals, schools or some business entities that do some business activity, have assets. In case of business entities, we define assets as all tangible and intangible assets that an enterprise acquires or creates. These assets they manage are necessary to run and achieve the goals of their business objectives.

We can divide assets from a different perspective, in particular:

In terms of character,

➔       Tangible assets;

➔       Intangible assets;

➔       Financial assets.

According to time:

➔       Long-term assets;

➔       Short-term assets.

In terms of liquidity:

➔       Liquid assets;

➔       Business assets with lower liquidity.

In the case of long-term assets, these are the assets of a business which retain their original form during their lifetime and they only wear and tear by their use.

Long-term assets include:

➔       Long-term intangible assets – are of an intangible nature, their useful life is longer than one year, and their acquisition cost in each case is more than EUR 2,400;

➔       Tangible fixed assets – are of a tangible nature, their useful life is longer than one year, and their purchase price is in each case higher than EUR 1,700. Tangible fixed assets are further divided into movables (machinery, equipment, means of transport) and immovables (flats, land, buildings);

➔       Long-term financial assets – these include works of art, precious metals, securities and shares (bonds, stocks) or collections. In the case of long-term financial assets, the period during which an accounting entity holds this asset must be longer than one year;

➔       Long-term receivables – The maturity period must be longer than one year.

Short-term asset (circulating asset) – is an asset that is transformed or consumed during its lifetime, it is in constant movement, circulation.

Short-term assets include:

➔       Stock – includes stocked material, semi-finished products of own production, products;

➔       Short-term receivables – primarily include receivables against customers for sold and unpaid services or goods with a maturity of up to one year;

➔       Short-term financial assets – include cash, securities, money on accounts, checks with a maturity of one year or less.

How do we know the sources of assets coverage?

What is asset inventory and asset stocktaking?