Differences between Fixed Assets and Current Assets

Difference between Fixed Assets and Current Assets

The major difference in both terms is on the basis of the period of time. To know the more Differences between Fixed Assets and Current Assets, we have to know the meaning of both terms. So, the meaning of both terms are explained below: –

Meaning of Fixed Assets: –

Those assets on which the business will get benefits for a long period of time i.e. minimum of one year are known as Fixed Assets. These are also known as long term assets or non-current assets.

In other words, on the basis of convertibility, those assets which cannot convert easily within the year known as fixed assets. It takes a long time to utilize, consumed or convert into cash i.e. more than one year. 

Examples are as follows: –

  • Land and Building 
  • Furniture and Fixture 
  • Plant and Machine
  • Office Equipment
  • Office Computers and Laptop
  • Vehicles
  • Leasehold Equipment
  • Electronic Fitting
  • Long term Investment
  • Computer Software 
  • Patent
  • Copyright
  • Trade Marks
  • Trade Name

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Fixed Assets – Meaning, Explained with Examples

Meaning of Current Assets: –

Those assets which are used or utilized within the period of one year are known as Current Asset. These are also known as short term assets.

In other words, Those assets which are very easily convertible into cash or which are already available in the liquid form are known as Current Asset. 

Examples of Current Assets: –

  • Cash or Cash Equivalents
    • Cash in Hand 
    • Cash at Bank 
  • Inventories
    • Raw Materials 
    • Work in Progress 
    • Finished Goods 
  • Receivables
    • Sundry Debtors 
    • Bills Receivables 
  • Pre-Paid Expenses
  • Marketable Securities 
  • Accrued Incomes
  • Short Term Loans and Advances 
    • Advance to Employees 
    • Advance to Vendors
  • Other Liquid Assets

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Current Asset – Meaning and Explanation with Examples

Chart of Difference Between Fixed Assets and Current Assets: –

Basis of Difference

Fixed Assets

Current Assets

Meaning

Those assets on which the business will get benefits for a long period of time i.e. minimum of one year are known as Fixed Assets Those assets which are used or utilized within the period of one year are known as Current Asset.

Length of Period of usage

The period of getting benefits from these types of assets are more than from one financial year. The period of getting benefits from these types of assets are less than from one financial year.

Also known as 

These are also known as Long Term Assets These are also known as Short Term Assets

Depreciation 

The depreciation has charged on these types of assets (except Land) according to the passing of time. The depreciation has not charged on these types of assets according to the passing of time.

Able to Liquidate

These assets have not able to liquidate easily. Liquidate means convert into cash. These assets have able to liquidate easily.
Helping in These are majorly helpful in Growth of Business and creating entry barriers. These are majorly helpful in Running a business smoothly.
Financed  If these type of assets are required to financed then these will be financed by long term liability. If these type of assets are required to financed then these will be financed by short-term liability.

Download the chart: –

If you want to download the chart please download the following image and PDF file:-

Chart of Difference Between Fixed Assets and Current Assets 296x300 - Differences between Fixed Assets and Current Assets

 

application pdf - Differences between Fixed Assets and Current Assets
Chart of Differences between Fixed Assets and Current Assets

 

The conclusion of Difference: –

The main difference in both types of assets is the period of life assets. The Fixed assets have long life i.e. more than one year and Current assets have shot life i.e. maximum one year.

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T.S. Grewals Double Entry Book Keeping - Differences between Fixed Assets and Current Assets

T.S. Grewal’s Double Entry Book Keeping

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