Business, Legal & Accounting Glossary
In business and accounting, an asset is anything owned, whether in possession or by right to take possession, by a person or a group acting together, e.g. a company, the value of which can be expressed in monetary terms. An asset is listed on the balance sheet. It has a normal balance of debit.
Other business subdivisions include intangible assets, that is, those assets which, though not visible, add to the earning power of the business, e.g. goodwill, patents, copyrights, etc. (also called invisible assets); liquid assets, which are a subdivision of current assets and also categories labelled trade investments, quoted investments, etc.
Those are assets continually turned over in the course of a business during normal business activity. Examples: debtors, stock, cash and work in progress. The phrase net current assets (also called working capital) is often used and refers to the total of current assets less the total of current liabilities.
Assets which are purchases for continued and long-term use in earning profit in a business. Examples: land, buildings, machinery, etc. They are written off against profits over their anticipated life by charging an annual amount calculated so as to eliminate the original cost (historical cost), less scrap value, over that period.
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This glossary post was last updated: 20th February, 2020