- Liquidity
16.1. Liquidity, measured in degree depends on how quickly an asset can be
converted into cash. Therefore current assets are more liquid than fixed
assets.
- Quick Asset
17.1. Quick Assets are part of current assets. it can quickly be converted into cash.
- Outstanding assets
18.1. This refers to amounts yet to be paid by the customers. These customers are
referred to as debtors or accounts receivable. This will appear on the asset
side of the balance sheet.
18.2. Long term assets like land, buildings, plant and machinery, motor vehicles,
fixtures and fittings are the fixed assets. There will not be much variation or
fluctuation in value as far as fixed assets are concerned.
18.3. On the other side current assets will vary much even on day-to-day basis.
All the inventories like stocks of finished products, raw materials and work-
in-progress are all current assets.
18.4. Normally fixed assets will not sell to raise cash, because they are meant for
long term use. The liquidity of the fixed assets is very low.
- Valuation
19.1. The value of assets should be estimated before it is incorporated in the
balance sheet. This should be done within the framework of the Accounting
Policy of the Board/ Organisation/ Business firm. The normal rule is that
current assets are valued at cost price or market price, whichever is less.
Fixed assets are valued at cost price less depreciation and shown on the
Assets side of the Balance Sheet.
19.2. In the absence of a definite policy, some companies may overvalue their
assets to mislead the various stake holders, like share holders and debenture
holders.
19.3. The value of marketable securities is computed with reference to their market
value and indicated in the assets side of the Balance Sheet.
19.4. While making a valuation of inventories, spoiled stocks or obsolete stocks
should be deleted.
