what is the difference between goods and assets
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Answer:
Explanation:
Assets include different items like fixed assets, current assets and investments. Some are tangible and some are intangible. Many items like cash, ownership rights, etc are the assets of a company but they are not goods. In crude terms we can say that all goods are assets but all assets are not goods
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Goods are a part of Assets. Assets are used to generate money. Speaking business-wise, not all goods are assets (because not all goods will be sold. Some will always be wasted or sold at prices lesser than their purchase cost). Also, not all assets are goods. For example, if you are in the nuclear energy business, you wouldn’t want to sell the very coveted knowledge of making bombs to even the highest bidder. The knowledge here is the asset but since you won’t sell it ever, it can’t be classified as a “Good”.
Goods: For a manufacturer, they are his finished products, also known as inventory. For a distributor and retailer too, they comprise the inventory. This inventory needs to be purchased, crafted and/or sold. For a service-based business, like a hotel, “Goods” comprises of (1) food from its restaurants, (2) staff behavior, (3) upkeep of its rooms and cost of doing so, (4) renting of its rooms, etc… For a software business, it is the finished software, service packs, upgrades, etc…
Assets: As the name suggests, assets are your money sources. They can either be directly sold to earn money or leveraged to earn money. They are generally classified as: ‘Current Assets’, ‘Non-Current Assets’, ‘Performing Assets’ and ‘Non-Performing Assets’. Now, goods that will be sold in the current FY, are current assets. Goods that get carried over to the next year are non-current assets. Goods that will be sold sooner or later, are performing assets. The real-estate that you have bought or rented to do your business/commerce is also a performing asset because you are using them to operate, store and sell, thereby generating revenue. The vehicle that you have purchased on the name of your business to transport your staff from one point to another, and bill it to their overall salary, is also a performing asset. The cutlery a hotel uses to serve its guests while eating food is a non-current but performing asset; non-current because it will be used year after year till its useful life, and performing because even though not billed to the customer, it is being directly used by the customer to eat the end product (food). However, a beautiful Van Gogh painting, costing millions of dollars, sitting idly on the wall of a restaurant, failing to get expensive customers, is a non-performing asset. Office space, not being used on a Sunday, becomes a non-performing asset. Unsold inventory is a non-performing asset. Deposits of money that do not earn any interest, are also a non-performing asset. Mutual Funds that make losses are NPAs too.
I hope that suffices. In case of doubt, you can revert further.