Asset Definition
Assets are economic resources controlled by a business which can potentially benefit its operations or are convertible to cash (cash itself is also an asset).
Examples of Assets
Following are the common assets of a business:
- Cash: Cash includes physical money such as bank notes and coins as well as amount deposited in bank for current use.
- Accounts Receivable: It includes the money owed to the business by outsiders such as customers and other businesses. In most cases accounts receivable arise from sales or services provided on credit. There is no interest on accounts receivable.
- Notes Receivable: Notes receivable include the money owed to business by outsiders for which there is a formal document for proof of debt. In most cases notes receivable also involve interest.
- Prepaid Insurance: The cost of insurance premium paid in advance.
- Inventory: These are goods and materials held by a business for the purpose of sale or for the production process.
- Supplies: Supplies include items held for use in miscellaneous activities by the business. It may include items used by business staff (for example: stationary products) and items used in production process (for example nails used in production of furniture).
- Equipment: Equipment having life more than a year. Examples are Vehicles, Production Machinery, Computers etc.
- Buildings: Buildings owned by the business. Examples are Office Building, Factory Building, Warehouse, Garage etc.
- Land: Includes cost of all the land owned by the business. Also includes cost of the land with building on it.
- Patents, Trade Mark, License: These are assets have no physical existence but have properties of assets.
The assets cash, accounts receivable, notes receivable, prepaid insurance, inventory and supplies are categorized as current assets.
Equipment, buildings, land and patents are categorized as non-current assets.
Those assets which have no physical existence are called intangible assets.
by Irfanullah Jan, ACCA and last modified on