All the assets of a firm and miscellaneous expenditure are recorded on the Assets side of the Balance Sheet. The assets of a firm can be bifurcated as follows:
Items appearing on the Assets Side of the Balance Sheet
Fixed Assets: These are the assets that are acquired for a longer period of time, generally for more than one year. These assets are not meant for resale, rather, they are used for the production or rendering of goods and services. Some of the examples of these assets are Machinery, Building, Goodwill, Plant, Furniture, etc. These assets are recorded in the Balance Sheet at cost after deducting depreciation. These assets include both tangible as well as intangible assets.
Tangible Assets are those assets that have physical existence. This implies that these assets can be seen or touched such as Plant, Furniture, Loose Tools, etc. Intangible Assets are those assets that do not have any physical existence. This implies that these assets cannot be seen or touched such as goodwill, patents, trademarks, etc.
Current Assets: These are the assets that are acquired by a firm with the purpose of resale in the business in order to generate revenues. These assets are held for a short period of time. In simple words, current assets can be defined as the assets which are in the form of cash or which can be easily converted into cash within a period of one year during normal business activities. Examples of these assets are debtors, bills receivables, stock, cash in hand, prepaid expenses, etc.
Fictitious Assets: These are the assets that are not convertible into cash. There may be some expenditures or losses that are required to be written-off over some years and the full amount of expenses or losses is not charged from the profits of the accounting year in which they are incurred. The portion of expenditure that is not written-off is shown on the Assets side of the Balance Sheet under the head Miscellaneous Expenditure. For example, Advertisement suspense, debit balance of Profit and Loss Account, etc. These are not actually the assets but are still recorded in the Balance Sheet for writing off them over some years.
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