AFM101 Lecture Notes - Lecture 1: Accounting Equation, Office Supplies, Accounts Receivable
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Most common types of assets: cash, accounts receivable, notes receivable, inventory, prepaid, Cash: money and any medium of exchange (e. g. , bank account balances, paper currency, coins, certificates of deposit, and checks). Accounts receivable: represent the amounts owing from customers who purchased goods/services from a seller but not yet paid for them (i. e. , purchased on account or on credit). Notes receivable: are more formal than accounts receivable. The borrower signs a written promise to pay the lender a definite sum at the maturity date, plus interest. Inventory: consists of the goods a company sells to customers. Prepaid expenses: expenses companies pay in advance (e. g. , insurance and rent). A prepaid expense is an asset because the payment provides a future benefit for the business. Prepaid rent, prepaid insurance, and supplies are prepaid expenses. Buildings: includes office buildings, manufacturing plants, and other building a company owns.