What are fixed assets?

Fixed assets are long-term tangible assets that a company uses in its operations to produce goods and services and are not expected to be converted into cash within a year. These assets typically include property, plant, and equipment, such as buildings, machinery, and vehicles. The defining characteristic of fixed assets is their duration and usage: they are utilized over multiple periods for production and operational purposes rather than for immediate resale.

This classification sets fixed assets apart from other asset types. For example, options like short-term investments refer to securities or assets that can easily be converted to cash within a year, while intangible assets, such as patents or trademarks, lack physical substance. Expendable resources indicate consumable goods that are used up within a single fiscal period, which does not align with the lasting nature of fixed assets. Thus, the emphasis on longevity and operational utility within the correct choice captures the fundamental nature of fixed assets in accounting.