Define: Assets

UK Accounting Glossary

Definition: Assets

Quick Summary

Rights or other access to future economic benefits controlled by an entity as a result of past transactions or events.

What is the dictionary definition of Assets?

Dictionary Definition

In common terms, an asset is an object, tangible or intangible, that is of value to it’s possessor. In most cases, an asset is cash or can be turned into cash; however exceptions occur; for example: prepayments.

Full Definition

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. Assets are listed on the balance sheet. It has a normal balance of debit. Assets may be classified in many ways. The principal distinction normally made for business purposes is between: fixed assets and current assets.

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.

Generally, an asset is something that is of value to a company. An asset can then be broken down further into Tangible and Intangible assets.

Examples of tangible assets include property, vehicles, stock, cash, money held in the bank and Debtors (as they owe money from sales made by the company).

However, these can be broken down still further into Fixed Assets and Current Assets Examples of intangible assets include patents, copyrights, trademarks and goodwill. While these may not have value to the man on the street, these generate income for the company.

Assets FAQ's