What are fixed assets?
Fixed Assets are those things which are owned by a business and which would be in productive use to earn revenue for more than one year.
Why are Fixed Assets important?
- They account for a significant part of the investment of the business.
- Fixed Assets such as equipment help to improve the quality of your product.
- They help to increase sales.
What should you consider before buying Fixed Assets?
- The product or service that your business makes.
- The cost of having the Fixed Asset:
- Purchased and operating
- Maintenance and Depreciation
- Availability of spare parts and repair services
- The people who will be using the Fixed Asset.
Why keep records of your Fixed Assets?
- To determine what the business owns at a particular point in time.
- To show how much has been invested in Fixed Assets and when that money was invested.
- To be able to tell whether the Fixed Assets continue to be productive or if there is a need for replacement of assets.
How is a record of Fixed Assets kept?
- By entering the information in the One-Book Record.
- By keeping a Fixed Assets file.
What is a Fixed Assets file?
The Fixed Assets file is made up of:
- Assets files
- Fixed Assets summary sheets.
Guideline for keeping your Fixed Assets files
- Keep a separate file for each major fixed asset such as land, building, and high-value equipment and machinery.
- Group fixed assets which are of a lower value together and create one file for these.
Ways of controlling and protecting Fixed Assets
- All decisions about the buying or selling of fixed assets should be made by the entrepreneur.
- Restrict some employees from using certain assets.
- Put in place a program for the repair and maintenance of the fixed assets:
- Service assets regularly
- Always have a supply of spare parts on hand.
- Place certain assets under the supervision of specific employees.
- Insure all Fixed Assets against fire, theft, and other perils.
- Put security measures in place to avoid customers or visitors removing assets from your premises.