Accrual Accounting

Types of Assets

On a classified balance sheet, assets are listed in order of liquidity - how quickly they can be converted into cash. They're also broken down into two categories:

1. Current assets - assets that you intend to convert into cash within a year
2. Long-term assets - assets that you intend to hold for more than a year
   

Your current assets will be cash and inventory, and your long-term assets will be furniture and equipment. We'll take a closer look at the assets section of your beginning balance sheet, but it makes sense to analyze your liabilities first.