What is the difference between short and long term assets in a business plan?

Question

In reviewing a business plan; what is the difference between long-term and short-term assets as it relates to start-up costs. As an example: Counters, Refrigerators (Long-Term assets) - However, Lighting and Tables (Short-term assets). What is the difference?

Answer 1

Ryan,

Technically according to accounting principles, short term assets are those that can be converted to cash quickly without any loss or penalty. Generally these are money market funds, t-bills, checking balances etc.

All of the assets you describe in your question fall under the category of furniture and fixtures and are considered capital assets (or long term) on the business' balance sheet.

I hope this helps.