EXPLAINATION OF BALANCE SHEET TERMS

ASSETS - These are valuable resources owned by the company and acquired at a measurable money cost. The rights and resources that have future benefits in use.

FIXED ASSETS - These are tangible relatively long - life assets acquired to use them in the production of goods and services. These are not held for resale. Land and buildings, plant and machinery, furniture and fixtures are instances.

INVESTMENTS - Made for reasons other than temporary use of excess cash; trade investments for securing selling agency for instance.

CURRENT ASSETS - These comprise of :

These assets are owned for a short period of time, usually not more than a year. These assets are expected to be realised in cash or sold or consumed during the normal operating cycle of the business. (The essence of distinction between current and non - current asset is time).

LIQUID ASSETS - These are readily available to discharge liabilities ; cash and marketable investments; for instance.

CASH - These are funds immediately available for disbursement without restrictions. These consist of cash and bank balances.

CURRENT INVESTMENTS / MARKETABLE SECURITIES - These are readily marketable. These are expected to be converted into cash within a year.

DEBTORS ACCOUNTS RECEIVABLES - These are the amounts owed to company and comprise of :

STOCKS / INVENTORIES - These comprise of :

BILLS RECEIVABLES - Amount owed / acknowledged by a note or some other written documents.

PREPAID EXPENSES AND DEFERRED CHARGES - These are assets of usually intangible nature. Their usefulness will expire in near future. These will eventually be treated as expenses. Annual payments of insurance for instance.

INTANGIBLE ASSETS - These comprise of goodwill, patents, franchises, copyrights, leases, licenses etc. These are non - physical and have larger span than items in current assets like prepaid expenses. They lack physical substance.

TANGIBLE ASSETS - Consist of physical property.

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