Asset - Business concept of the day
Definition: In financial accounting terms, an asset is anything (tangible or intangible) owned by the company to produce value. Assets represent true value of a company that can be used to generate/convert into cash. However, the ease of conversion/time required to convert into cash depends on the type of asset - Current Asset, Fixed Assets, Financial Assets and Intangible Assets.
Example: Current Assets (can be converted into cash within one year): Cash equivalents, accounts receivable etc.
Fixed Assets (long-term assets which cannot be converted to cash in one year): Plant, equipment, machinery etc.
Financial Assets (investments in the assets and securities of other institutions): Stocks & bonds of another institution
Intangible Assets (assets that have no physical presence): Patents, Trademarks, etc.
Business Insight: Assets are reported on a company's balance sheet (left side) and are bought or created to increase a firm's value or benefit the firm's operations. The assets are subject to depreciation/amortisation as per generally accepted accounting principles and or statutory laws of a country.
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