Assets

These are what your firm owns. Assets are generally divided into two types: fixed and current. Fixed assets are items held by your business for long-term use. They are generally used to aid you in producing, servicing or selling something and therefore, their life-span typically extends over more than one financial year. There aren't any hard or fast rules however, depending on how the goods are utilised in your business. A piece of office equipment such as a fax machine, or piece of furniture, or a vehicle would be considered a fixed asset.

Current assets are those items you purchase that are used relatively quickly in the process of trading. Items that (hopefully) you would use up within a single financial year. In other words, items that you expect to turn into cash, or better yet, cash in your bank accounts. The money in your cheque accounts are current assets. Stock you purchase from a wholesaler to retail in your store, or goods you require to manufacture furniture these are current assets. In a like manner, money owed to you in the short term, such as your customers on 30 day terms, are also current assets. As is your stock on hand. You expect to swap the "debt" for a cash payment fairly soon.