Friday, November 4, 2016

What is an Asset?

Various examples of assets
Slide showing various assets as an example

Meaning and Definition:

The dictionary meaning of the word ‘Asset; is a useful or valuable thing or person. In accounting parlance, however, person is kept outside the scope for the present, animals and plants are included though, and includes all things living or non-living, tangible or intangible, valuable rights and so on.

Another way defining is, what is owned is an asset and what is owed is a liability.


Assets are employed in the business either for a short time as stock-in-trade - that is meant for further sale, or for the long-term use for producing the goods and services.

In the double entry system of accounting, universally practiced, assets have a debit balance. Therefore all items appearing in the balance sheet and having a debit balance are assets.


Examples:

Tangible
Intangible
Living
Moving
Land
Bank Balance
Trees
Trucks
Buildings
Goodwill
Grass
Cars
Plant
Brand Value
Cattle
Ships
Machinery
Mining Right
Poultry
Aircraft
Cash
Software
Fish
Trains
Inventory
Receivables from customers
Horses
Motorcycles

Conclusion:

Assets are useful and valuable things, owned by the business and employed either for short-term as stock-in-trade or long-term as fixed assets.

Further Reading:

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