What do fixed assets include?

Fixed assets are long-term tangible assets that an organization uses in its operations to generate income. These assets are not expected to be converted into cash or consumed within one year but instead provide value over an extended period.

The correct response encompasses buildings, property, and equipment, as these are the core components of fixed assets. Buildings are physical structures that house operations or provide space for organizational activities. Property may refer to land owned, which is also not subject to depreciation. Equipment includes machinery and tools essential for production or service provision.

This classification highlights that fixed assets are tangible in nature and critical to a company's operational capacity. In contrast, current inventory and supplies fall under current assets, which are meant to be sold or consumed within a year. Intangible assets, such as patents and copyrights, differ from fixed assets as they do not have a physical presence and are typically classified separately in financial statements. This understanding is vital in preparing accurate financial records and assessing an organization’s financial health.