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Asset - Business concept of the day

Asset - Business concept of the day

Finance & Accounting

GlobalLinker Staff

GlobalLinker Staff

30 Oct 2018, 13:02 — 2 min read

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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GlobalLinker Staff

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