Classification of Items - JSS3 Business studies Lesson Note

Assets:
Assets are resources owned or controlled by a company that can provide future economic benefits. They are typically classified into:

• Current Assets: Assets expected to be converted into cash or used up within one year. Examples include cash, accounts receivable, and inventory.
• Non-current Assets: Assets expected to provide economic benefits beyond one year. Examples include property, plant, equipment, and long-term investments.

Liabilities:
Liabilities are obligations or debts that a company owes to external parties. They are classified into:

• Current Liabilities: Obligations due within one year. Examples include accounts payable, short-term loans, and accrued expenses.
• Non-current Liabilities: Obligations due beyond one year. Examples include long-term loans and bonds payable.

Equity (Capital):
Equity represents the owners' stake in the company. It includes:

• Share Capital: The amount invested by shareholders in exchange for ownership.
• Retained Earnings: Accumulated profits that have not been distributed as dividends.
• Reserves: Amounts set aside for specific purposes, such as legal reserves or revaluation reserves.