Classification of Assets & Classification of Sources Of Funds

May 30th, 2008 Comments off
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Tabulated below for easy reference are the classification of assets and the sources of finance


Classification Of Assets

Classification of Sources of Financing

Divided into 2 types:

Divided into 3 types


Permanent Assets


Expected to be held for more than a year


Two types viz:-



· Fixed asset


  • Permanent current assets which includes current assets like cash / stocks / receivables re: minimum cash or bank balance or minimum level of stocks (safety or buffer stocks) maintained by the firm over the year




Permanent Sources


Financing with maturing period more than one year which includes medium term loans, common stock and long term debts


Temporary Assets


Current asset that will be liquidated and replaced within the current year.




Current assets = Temporary + Permanent



Temporary Sources

Short term financing like short term notes payable, commercial paper and loans secured by accounts receivable and inventories. Natural sources is the accounts payable/creditors of the firm.



Spontaneous Sources


Comprises trade credit and other accounts payable that arise spontaneously in the firm’s daily operations. Other sources like accrued taxes, accrued expenses still not paid



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Financial Accounting


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