What is Asset?

ACCA Accounting Basics

What is Asset?

In this article, I’m sharing with you what are ASSETS, types of assets and also the importance of
asset in the business.

In financial accounting, the asset is any resource owned or controlled by a business.
In simple terms, it is anything that is used to produce positive economic value. Assets represent the value of
ownership that can be converted into cash. Examples of assets are receivables, cash, building,
inventory, etc.
Types of Assets: are three types Convertible assets, physical existence, usage.

  • Convertible assets: in this categorie we have further two types that given below:
    Current Assets : are those assets which bought for a temporary use. They also have a short term

    These assets have more liquidity. Liquidity means “an ease with which an asset can be
    converted into cash”. Examples of current assets include inventory, cash , receivables, deposits etc.
  • Non-current Assets :These are opposite to current assets. They bought for a permanent use. Benefits
    also for a long term, less liquidity. Examples of non-current assets are building, property, plant,

    Physical existence : in this term we deal with tangible and intangible assets.
    Tangible assets :These assets having a physical appearance. Including cash, inventory, vehicles
    equipments etc. simply all the things fall in currents assets and non-current assets are tangible assets.
    Intangible assets :These are those assets which do not exist in physical form and include things are
    goodwill, patents, trademark etc.
  • Usage:
    Operating assets :An assets that are directly indulged into business day to day activities are termed as
    operating assets.
    Non-operating assets :These are not take part in day to day activities. These are extra assets of a
    A ssets are important to any kind of business because they have a clear financial benefits. It allows gain
    profit , improve the business value. If a business is able to create an accurate description of its assets
    records , business owners can easily determine the financial status of business.

    Important asset at your organization is not something that you can put your hands on. The most valuable part of your company is the people, human capital and any plans that move your business on further level.

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