Describe the concept of fixed assets
Fixed assets are long-term tangible assets that are used in the operations of a business and are not intended for sale. These assets are essential for the business to generate revenue and typically have a useful life of more than one year. Examples of fixed assets include buildings, machinery, equipment, vehicles, and land.
Fixed assets are recorded on a company's balance sheet and are typically depreciated over time to reflect their decreasing value as they are used. Depreciation is an accounting method used to allocate the cost of a fixed asset over its useful life, reducing the asset's value on the balance sheet each year.
Fixed assets are important for a business as they help in generating revenue and are key to its operations. Proper maintenance and management of fixed assets are essential to ensure their longevity and optimal performance.