Which type of asset is commonly referred to as fixed assets?

Fixed assets are commonly referred to as capital assets. These are long-term tangible assets that an organization uses in the production of its goods and services, which are not expected to be converted into cash or consumed within a year. Examples of capital assets include machinery, buildings, and land. Their value is generally significant, and they are crucial for operational capacity and long-term sustainability of a business.

Understanding fixed assets is important because they are typically subject to depreciation, which impacts financial statements, tax calculations, and investment decisions. This classification distinguishes them from current assets, which are expected to be converted to cash or used within a year, and intangible assets, which lack physical substance but still have value, such as trademarks or patents. Short-term assets, similarly, refer to those that are expected to be liquidated or used within a short timeframe, usually within one year. Thus, recognizing the nature and role of capital assets helps in effective asset management and financial planning.