What are fixed assets?

Fixed assets are defined as long-term tangible assets that a business uses in its operations to produce goods or services. These assets are not intended for immediate resale but rather are held for use over a significant period, typically exceeding one year. Examples of fixed assets include buildings, machinery, equipment, vehicles, and furniture. They are crucial for a company's operations as they contribute to the production process, providing value through their use rather than their sale.

This option accurately captures the essence of what fixed assets are. Distinguishing them from other types of assets is important; for example, short-term assets that can easily be converted to cash, such as inventory or accounts receivable, are classified differently. Furthermore, fixed assets are not characterized by fluctuating values, as their value typically remains more stable over time compared to stocks and bonds. Lastly, assets purchased specifically for resale, like retail inventory, are classified under different categories, such as current assets, rather than fixed assets.