Outstanding Assets

Income earned but not received and expenses paid in advance are called outstanding assets. For Example: Account Receivable, Prepaid insurance,

Contingent Assets

Assets which come into existence upon happening or not happening of certain event are called contingent assets.

A contingent asset could be a potential asset related to a contingent gain. in contrast to contingent liabilities and contingent losses, contingent assets and contingent gains aren't recorded in accounts, even after they are probable and therefore the amount may be estimated.

Fictitious Assets

Assets which cannot be used and have no market value are called fictitious assets. For example: Preliminary expenses, Discount on issue of shares.

Wasting Assets

Assets whose value gradually decreases due to use are called wasting assets. For example: Mines, Forests

Assets have a helpful life, typically based on the period of your time that they need productive capability. because the plus is employed, it depreciates, eventually having very little or no residual price. throughout the amount of depreciation, the plus is named a "wasting plus." for instance, natural resources, like gas and timber, are wasting assets that eventually square measure used so don't have any remaining price.

Liquid Assets

Assets which are quickly converted into cash are called liquid assets. All current assets are liquid assets except inventory and prepaid expenses. Liquid Assets = Current Assets – inventory – Prepaid Expenses

An asset that can be converted into money quickly and with minimal impact to the price received. assets are usually regarded in the same light as money because their costs area unit relatively stable when they area unit sold  on the open market.


For an quality to be liquid it needs an established market with enough participants to soak up the selling without materially impacting the value of the asset. There also has to be a relative ease within the transfer of possession and also the movement of the asset. liquid assets embody most stocks, money market instruments and government bonds. The exchange market is deemed to be the foremost liquid market within the world because trillions of dollars exchange hands daily, making it not possible for any one individual to influence the rate of exchange. 

Sum of Years Digits Method

Sum-of-years' digits is a depreciation method that ends up in a more accelerated write-off than straight line, but less accelerated than that of the double-declining balance methodology. under this methodology, annual depreciation is determined by multiplying the depreciable cost by a series of fractions based on the total of the asset's useful life digits. The total of the digits is determined by using the formula (n2+n)/2, where n is equal to the useful lifetime of the asset.

Units of Production

The units-of-production depreciation method assigns an equal amount of expense to every unit produced or service rendered by the asset. This method is typically applied to assets employed in the production line. The formula to calculate depreciation expense involves 2 steps: (1) determine depreciation per unit ((asset's historical value - estimated salvage value) / calculable total units of production during the asset's useful life); (2) verify the expense for the accounting amount (depreciation per unit X number of units created in the period).