Assets
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Assets are the resources owned by a company which have future economic value and can be measured and expressed in dollars. As defined by the International Accounting Standards Board: "An asset is a resource controlled by the enterprise as a result of past events and from which future economic benefits are expected to flow to the enterprise."
In accounting, asset refers to the entries on a balance sheet showing all properties, both tangible and intangible, and claims against others that may be applied to cover the liabilities of a person or business. Tangible assets include money, buildings, investments, inventory, or other valuables. Intangible assets are nonphysical resources and rights that have a value to the firm because they give the firm some kind of advantage in the market place. For example goodwill, copyrights, trademarks, patents etc. It is something that can generate cash flow whether it?s manufacturing equipment or a patent.
Assets can be further classified as current or fixed (non-current). Current means that the asset will be consumed within one year. Generally this includes things like cash, accounts receivable and inventory. Fixed assets are those that are expected to keep on providing benefit for more than one year, such as equipment, buildings, real estate, goodwill, patent etc.
It is important to understand that in accounting an asset is not the same as ownership. Assets are equal to "equity" plus "liabilities."
The accounting equation relates assets, liabilities, and owner's equity as:
Assets = Liabilities +Capital (Owners' Equity)
The accounting equation is the mathematical structure of the balance sheet.
Assets are reported on the balance sheet usually at cost or lower.
Related Topics
Current Assets
Inventory
Long Term Investments
Intangible Assets
Bank Reconciliation Statement
Depreciation