Assets, What Is an Asset? All about assets!!

Assets,

An asset is a valuable resource that a person, company, or country possesses or controls in the hopes of reaping future benefits.

In simple terms, an asset is something valuable, that belongs to a person or organization,

and can be utilized to pay off debts in the future.

 

Assets have financial values, that can be transformed into cash.

Cash, on the other hand, is an asset in its own sense.

Generally, there are three ways to classify assets.

• That is on basis of Convertibility, Physical Existence and Usage.
• Convertibility can be further classified into, the current assets and fixed assets,
•  Physical Existence, into tangible assets and Intangible asset  and,
• Usage into operating assets and Non-operating assets.

1. Convertibility, Here Assets are classified, depending on how easy they are to convert into 
cash.

                                                                  Current assets:

• Examples of Current assets 
• include, Cash and equivalents,
• Accounts receivable,
• Short-term investments,
• Inventory,
• Prepaid expenses,
• Any other liquid asset,

                                                                  Fixed assets. 

• Examples of Fixed assets,
•  include Land, Buildings, 
• Vehicles, Furniture,
•  Machinery in general, Property, Plant, and Equipment.

 2. Classifying assets based on their physical existence in short, 
tangible and intangible assets.

                                                                  Tangible assets

Tangible assets are assets with a known monetary worth and, in most cases, a physical form.

Examples of tangible assets are 

• Cash, 
• Machinery, 
• Vehicles, 
• Furniture, 
• Investments.

                                                                  Intangible assets

while intangible assets are non-physical assets.It is impossible to touch or feel such assets.

Examples of intangible assets are,

• goodwill, 
• patent, 
• copyrights, 
• trademarks.

3. Assets are classified according to how they are used in the firm.

                                                                  Operating assets

Operating assets are assets, that are actively used to generate, a company entity's principal .revenue, and income stream.

                                                                  Non-operating assets,

Whereas, Non-operating assets, are assets that are owned by a company but are not used in its day-to-day operations, nor are primary revenue-generating activities.