Definition of an Asset Account
An asset account is a general ledger account used to sort and store the debit and credit amounts from a company's transactions involving the company's resources.
The balances in the asset accounts will be summarized and reported on the company's balance sheet.
Generally, the asset account balances are debit balances and are increased with a debit entry and decreased with a credit entry.
Examples of Asset Accounts
Some examples of asset accounts include Cash, Accounts Receivable, Inventory, Prepaid Expenses, Investments, Buildings, Equipment, Vehicles, Goodwill, and many more.
Two asset accounts, Allowance for Doubtful Accounts and Accumulated Depreciation, are known as contra asset accounts since these accounts are expected to have credit balances.
Asset Accounts Are Permanent or Real Accounts
Asset accounts are referred to as permanent or real accounts since they are not closed at the end of the accounting year. Instead, each asset account's balance at the end of the accounting year is carried forward to become the beginning balance of the next accounting year.