Cash are currency and coins, balances in checking accounts, and items acceptable for deposits in
these accounts, such as checks and money orders received from customers.
This is the receivables resulting from the sale of goods or services.This is treated as a current
asset on the balance sheet.
Prepaid expenses result from businesses making payments for goods and services to be received
in the near future.
Property, plant and equipment
Property, plant and equipment are tangible, long-lived assets used in the operations of the
business. Land, natural resources, buildings, furniture, equipment, and machinery are included in
this category. They are listed under the asset portion of the balance sheet. One major component
that comes into play with property, plant, and equipment is depreciation. Mostly for equipment
and machinery things are depreciated on either a straight line, declining, sum of the years digits,
or units of production balance. For natural resources they use a method similar, but it is called
depletion. Accounting for these things is pretty simple. The item, or land, is listed on the books at
its value and every year the calculated depreciation is taken off and that determines its book
value. Many times there is an estimated life and salvage value if the company thinks it can resell
the item. If not, it is disposed of and the gain or loss of the sale is recorded on the books as well
as removal of the item from the books.
Figuring the cost of an item takes into consideration more than just the purchase price. Added to
that would be any taxes paid, less any discounts received, cost of transportation that a company
pays to bring the item to where it needs to go, and the cost of getting it ready for use. The cost of
land would include any attorney fees, real estate fees, title fees, back taxes that need to be paid,
and the cost of preparation for the lands intended use. Buildings also have additional costs such
as legal fees and remodeling fees to prepare it for use. The same goes for natural resources.
Basically any costs that are necessary to get an item or land ready to use for business is included