What are assets?

Definition of Assets

In accounting and bookkeeping, a company's assets can be defined as:

  • Resources or things of value that are owned by a company as the result of company transactions
  • Prepaid expenses that have not yet been used up or have not yet expired
  • Costs that have a future value that can be measured

Assets are recorded at their cost and (except for some securities) are not adjusted for changes in market value. Long-term assets such as buildings and equipment are depreciated and therefore will be reported at less than their cost.

Assets are part of the accounting equation and the balance sheet, both of which are presented in this format:
Assets = Liabilities + Stockholders' (or Owner's) Equity.

Some of the company's most valuable assets may not have been acquired in a transaction and therefore are not listed as assets on the company's balance sheet. Examples include a highly-respected trade name, a valuable patent, a very effective management team and company culture.

Example of Assets

Examples of assets that are likely to be listed on a company's balance sheet include: cash, temporary investments, accounts receivable, inventory, prepaid expenses, long-term investments, land, buildings, machines, equipment, furniture, fixtures, vehicles, goodwill, and more.

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