Balance Sheet - Assets Side

Now we learn that balance sheet has two side i.e. Assets and Liabilities. Lets look at the component of assets side of Balance sheet.

1. Non-current assets:

Non-current assets, are those assets that are not turned into cash easily, expected to be turned into cash within a year and/or have a life-span of over a year. They can refer to tangible assets such as machinery, computers, buildings and land.

Non-current assets also can be intangible assets, such as goodwill, patents or copyright. While these assets are not physical in nature, they are often the resources that can make or break a company - the value of a brand name, for instance, should not be underestimated.

Non current assets are subject to Depreciation / Amortization which is calculated and deducted from most of these assets, which represents the economic cost of the asset over its useful life.

2. Investment: 

Now a day investments are considered as  non current assets. Investment are sum total of non current investment and investment made in group/sister concern.

3. Current assets:

Current assets are those assets which have a life span of one year or less, meaning they can be converted in to cash with in one year or one operating cycle whichever is higher. 

Current assets Includes: 

cash and cash equivalents, accounts receivable and inventory. Cash, the most fundamental of current assets, also includes non-restricted bank accounts.

Cash equivalents are very safe assets that can be are readily converted into cash such as  Treasuries notes. Accounts receivable consists of the short-term obligations owed to the company by its clients/customers. Companies often sell products or services to customers on credit, which then are held in this account until they are paid off by the clients.

Inventory represents the raw materials, work-in-progress goods and the company's finished goods. Depending on the company, the exact makeup of the inventory account will differ. For example, a manufacturing firm will carry a large amount of raw materials, while a retail firm caries none. The makeup of a retailers inventory typically consists of goods purchased from manufacturers and wholesalers.