Material or monetary resources owned by an individual or corporation. Most assets can be converted into cash at some point and become liquid when traded in the marketplace.
Assets can be divided into the following categories:
- current assets: cash, short term investments, inventory, and other items expected to be converted to cash, sold, or consumed
- Long-term assets: investments held for many years, like real estate, bonds, securities, and pensions
- Fixed assets: purchased for continued and long-term use in earning a profit, like land, buildings, machinery, furniture, tools, and insurance
- Intangible assets: items lacking physical substance, such as trademarks, patents, and copyrights
Often used as collateral when borrowing money: Assets = Liabilities + Owners’ Equity.