What are Assets?

An asset is an expenditure that has utility through multiple future accounting periods. If an expenditure does not have such utility, it is instead considered an expense. Examples of assets are cash, trade receivables, inventory, and prepaid expenses. Assets appear on a reporting entity’s balance sheet.

What are Fixed Assets?

A fixed asset is property with a useful life greater than one reporting period, and which exceeds an entity's minimum capitalization limit. A fixed asset is not purchased with the intent of immediate resale, but rather for productive use within the entity. Also, it is not expected to be fully consumed within one year of its purchase. Examples of fixed assets are buildings, computer hardware and software, furniture and fixtures, land, manufacturing equipment, office equipment, and vehicles. Fixed assets appear in the long-term assets section of a reporting entity’s balance sheet.

Comparing Assets and Fixed Assets

A key difference between assets and fixed assets is that fixed assets are a subset of all assets, Also, fixed assets are generally larger in amount and utilized over an extended period of time. A third difference is that fixed assets are depreciated ratably over their useful lives, which is not the case for other assets.