Difference between revisions of "Asset"
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| − | 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 as cash, notes receivable, accounts receivable, property, stock, inventory, fixtures, business machinery, or ''intangible'' value such as property rights, patents, and goodwill. | + | 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 as cash, notes receivable, accounts receivable, property, stock, inventory, fixtures, business machinery, or ''intangible'' value such as property rights, patents, and goodwill. |
| − | Assets can be categorized in various ways: Monetary Assets are those that consist of cash or will be converted to cash. An example of a monetary asset is Accounts | + | Assets can be categorized in various ways: Monetary Assets are those that consist of cash or will be converted to cash. An example of a monetary asset is Accounts Receivable. Nonmonetary assets are not normally converted to cash. Machinery and Equipment owned by a company are examples of nonmonetary or ''fixed'' assets. |
Assets may also be considered as Current or Non-current. Current assets are generally expected to be consumed within one year. Examples of current assets would be cash and inventory. Non-current assets are considered to have permanent, long-term benefits and life expectancy of more than one year. Examples of long term assets are equipment, buildings, and real estate. | Assets may also be considered as Current or Non-current. Current assets are generally expected to be consumed within one year. Examples of current assets would be cash and inventory. Non-current assets are considered to have permanent, long-term benefits and life expectancy of more than one year. Examples of long term assets are equipment, buildings, and real estate. | ||
| − | 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. Fixed, or long term assets are usually subject to depreciation, accounting for normal wear and tear on the asset, which decreases it's value. Real estate is the only long-term asset that is normally not subject to depreciation, as it tends to increase, rather than decrease in value over time. | + | 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. Fixed, or long term assets are usually subject to [[depreciation]], accounting for normal wear and tear on the asset, which decreases it's value. Real estate is the only long-term asset that is normally not subject to depreciation, as it tends to increase, rather than decrease in value over time. |
A businesses net assets (or ''net worth'') is the excess of assets over liabilities. | A businesses net assets (or ''net worth'') is the excess of assets over liabilities. | ||
[[Category:Accounting terms]] | [[Category:Accounting terms]] | ||
Revision as of 18:29, August 12, 2007
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 as cash, notes receivable, accounts receivable, property, stock, inventory, fixtures, business machinery, or intangible value such as property rights, patents, and goodwill.
Assets can be categorized in various ways: Monetary Assets are those that consist of cash or will be converted to cash. An example of a monetary asset is Accounts Receivable. Nonmonetary assets are not normally converted to cash. Machinery and Equipment owned by a company are examples of nonmonetary or fixed assets.
Assets may also be considered as Current or Non-current. Current assets are generally expected to be consumed within one year. Examples of current assets would be cash and inventory. Non-current assets are considered to have permanent, long-term benefits and life expectancy of more than one year. Examples of long term assets are equipment, buildings, and real estate.
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. Fixed, or long term assets are usually subject to depreciation, accounting for normal wear and tear on the asset, which decreases it's value. Real estate is the only long-term asset that is normally not subject to depreciation, as it tends to increase, rather than decrease in value over time.
A businesses net assets (or net worth) is the excess of assets over liabilities.
