Types of assets

The two main types of assets are current assets and non-current assets. These classifications are used to aggregate assets into different blocks on the balance sheet, so that one can discern the relative liquidity of the assets of an organization.

Current assets are expected to be consumed within one year, and commonly include the following line items:

Non-current assets are also known as long-term assets, and are expected to continue to be productive for a business for more than one year. The line items usually included in this classification are:

The classifications used to define assets change when viewed from an investment perspective. In this situation, there are growth assets and defensive assets. These types are used to differentiate between the manner in which investment income is generated from different types of assets.

Growth assets generate income for the holder from rents, appreciation in value, or dividends. The values of these assets can rise in value to generate a return for the holder, but there is a risk that their valuations can also decline. Examples of growth assets are:

  • Equity securities

  • Rental property

  • Antiques

Defensive assets generate income for the holder primarily from interest. The values of these assets tend to hold steady or can decline after the effects of inflation are considered, and so tend to be a more conservative form of investment. Examples of defensive assets are:

Assets may also be classified as tangible or intangible assets. Intangible assets lack physical substance, while tangible assets have the reverse characteristic. Most of an organization's assets are usually classified as tangible assets. Examples of intangible assets are copyrights, patents, and trademarks. Examples of tangible assets are vehicles, buildings, and inventory.

Related Courses

Accounting for Inventory
Accounting for Investments
Fixed Asset Accounting
The Balance Sheet