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There are at least three different ways that assets can be grouped into two separate categories:
Current and Non-current (or Long-Term assets): Current assets are cash and items that the company expects to convert into cash during the next accounting period (such as trade accounts receivable.) Non-current assets are those from which future economic benefits are expected flow into the business over the next several accounting periods (e.g., factory and equipment)
Tangible and Intangible: Tangible assets can be touched and seen: Cash, factory building, inventories, etc. Intangible assets generally legal rights that cannot be touched: franchise rights, goodwill, patents, and trademark rights are intangible assets.
Monetary and non-monetary: Monetary assets are denominated in fixed monetary amounts that will not change over time ($500 cash in a bank account, or a note receivable for $4,000). Non-monetary assets have values that are not fixed in definite dollar amounts (e.g., equity securities owned, or inventories).
If management is dishonest in preparing the company's financial statements, there may be a fourth classification of assets, discovered only when the financial statements are audited: Existent and Non-Existent Assets. But a balance sheet containing nonexistent assets will not be signed off on by any public accountant who wants to keep his CPA licence. :) And managers who prepare fraudulent financial statement can serve jail time.
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What are Two types of equity in a business?
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