Accounting terms

Dictionary of all accounting terms

What are Assets?

An asset is any resource that a business or individual owns and which can be converted into cash

Any tangible or intangible resource that has positive economic value can be considered an asset. Therefore, technically, cash is also considered an asset, though it is easiest to consider resources that can be converted into cash as an asset.

Assets can be broken down into two categories: tangible and intangible

Tangible Assets

Tangible assets are the most commonly discussed. They included current assets such as inventory and fixed assets such as equipment and buildings.

For example, if you have a cleaning business with cash in the bank, investments, and supplies, those are all current assets. You can also include accounts receivables (unpaid invoices) as a current asset. These are listed on the balance sheet in order of liquidity, the most liquid (cash) at the top.

Your fixed assets, or long-term assets, are things that have value to the business but cannot be converted into cash in a time frame of a year or less. This includes things such as manufacturing equipment, land, buildings, furniture and vehicles.

Intangible Assets

Intangible assets are things such as copyrights, trademarks, and financial assets (such as accounts receivables, stocks, etc.).

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