Difference between revisions of "Asset"

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(Asset (Accoun ting))
 
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In Accounting, an Asset is a thing with future value.  In certain cases, such a 'thing' may be intangible. Assets can be categorized in various ways:
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In [[accounting]], an '''asset''' is any resource owned by a business, having economic value or the expectation of future benefit.
  
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Monetary Assets are those that consist of cash or will be converted to cash.  An example of a monetary asset is Accounts Receiveable.
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An asset can have ''tangible'' value (such as cash, notes receivable, [[accounts receivable]], property, [[stock]], inventory, fixtures, and business machinery), or ''intangible'' value (such as property rights, patents, and [[goodwill]]).  
  
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Nonmonetary assets will not be converted to cash.  Machinery and Equipment owned by a company will be shown as an asset, but such assets are not normally converted to cash.
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==Financial Statements==
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On a company's [[financial statement]], assets are classified as "current" and "non-current".
  
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Assets may also be considered as Current or Non-current.  Theoretically, a Current asset is one that will be converted to cash (directly or indirectly) within the business entity's operating cycle.  Practically speaking, Current Assets are always measured as being due within one year.
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Current assets are defined as those which can or will be converted to cash within one year.  In addition to cash, current assets will generally include [[accounts receivable]], short-term assets such as [[certificates of deposit]], the unused portion of prepaid expenses, inventory, and if a company has a long-term receivable (such as selling an old facility to a new owner), the portion of the receivable which it expects to collect during the year.
  
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Non-current or Long Term assets extend beyond one year.  The previous example of Machinery and Equipment also applies here, but not all Long Term Assets are non-monetary or vice versa.
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Non-current assets are all others which are not current.  Common examples are land and facilities, manufacturing equipment, and intangible assets.  Also, the portion of a long-term receivable owed after one year is classified as non-current.
  
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When assets become impaired, their value must be adjusted.  If a company holds an account receivable from another company that goes bankrupt, the receivable must be written down to the amount (which is very possibly zero) that will eventually be received.
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When assets become impaired, their value must be adjusted.  The most common adjustments shown on financial statements are "contra-asset" accounts for uncollectible accounts receivable, and for [[depreciation]] and [[amortization]].
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A business's net assets (or ''net worth'') is the excess of assets over liabilities.
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[[Category:Accounting Terms]]
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[[Category:Economics]]

Latest revision as of 17:40, May 2, 2026

In accounting, an asset is any resource owned by a business, having economic value or the expectation of future benefit.

An asset can have tangible value (such as cash, notes receivable, accounts receivable, property, stock, inventory, fixtures, and business machinery), or intangible value (such as property rights, patents, and goodwill).

Financial Statements

On a company's financial statement, assets are classified as "current" and "non-current".

Current assets are defined as those which can or will be converted to cash within one year. In addition to cash, current assets will generally include accounts receivable, short-term assets such as certificates of deposit, the unused portion of prepaid expenses, inventory, and if a company has a long-term receivable (such as selling an old facility to a new owner), the portion of the receivable which it expects to collect during the year.

Non-current assets are all others which are not current. Common examples are land and facilities, manufacturing equipment, and intangible assets. Also, the portion of a long-term receivable owed after one year is classified as non-current.

When assets become impaired, their value must be adjusted. The most common adjustments shown on financial statements are "contra-asset" accounts for uncollectible accounts receivable, and for depreciation and amortization.

A business's net assets (or net worth) is the excess of assets over liabilities.

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