Monetary vs Nonmonetary Assets
Difference between Monetary and Nonmonetary Assets: – Any property that has worth and is owned by business is known as asset or business asset. Assets have great importance in business, because assets help businesses to survive in difficult time period. There are two types of assets which are commonly known by a lot of people. Monetary assets and nonmonetary assets, here the question is what is the difference between monetary and nonmonetary assets?
Difference between Monetary and Nonmonetary Assets
Monetary and nonmonetary assets are two of the most important categories of assets. The key difference between monetary and nonmonetary assets is the fact that monetary assets can be readily converted into a fixed sum of money while nonmonetary assets may not be converted into a set sum of money, in the immediate short time. Both financial and nonmonetary assets are essential for a business to achieve a greater benefit.
Monetary Assets
Monetary assets are the resources that can be readily converted into a fixed amount of money. These assets have a high fluidity. Fluidity can be thought of a characteristic of an asset which explains how easily can an asset be transformed into money. Numerous real and current assets are included in the category of monetary assets.
- Cash and Cash Equivalents
- Receivable Accounts
- Receivable Notes
- Inventory
What are Nonmonetary Assets?
Nonmonetary assets are referred to as the assets that cannot be readily converted into a fixed amount of money in short time. The monetary value of such assets fluctuates and changes frequently over time, and is non-fluid in nature. Many intangible assets and non-current assets are nonmonetary in nature.
- Intangible Resources (Will)
- Copyrights and Us patents
- Non-current Assets (Property and Equipment)
Major Differences between both monetary and nonmonetary assets
- Monetary assets are the assets that can be readily transformed into a fixed amount of money, but nonmonetary assets cannot.
- Liquidity of monetary assets is high as compared to that of nonmonetary assets, as their value is nonfluid.
- Cash and cash equivalents, accounts receivables, notes receivables and products are types of monetary assets.
- Goodwill, copyrights, US patents, and property, plant and equipment are types of nonmonetary assets.
I’m sure after reading these major differences now you people have no issues about the difference between monetary and nonmonetary assets. Keep visiting the website to learn more about such terms, which confuses us.
