Asset definition

An asset is a resource that has economic value and can be owned or controlled by an individual, corporation or country, with the expectation that it will provide a benefit in the future. Some benefits include generating cash flow or reducing expenses. Assets are often reported on a company’s balance sheets and are classified as current, financial, fixed, and intangible. Assets can be bought or created to increase the value of a firm or benefit its business operations.

Different types of assets

There are a few different types of assets, which can be categorised based on several characteristics.

Current assets: Current assets can be converted into cash by the asset owner. Companies mainly use current assets to fund their daily operations or other short-term expenses. Examples of current assets include cash, funds, goods and products, marketable securities, and accounts receivable.
Fixed assets: Fixed assets are tangible and expected to have a life of greater than a year and typically help companies produce goods or provide services for their customers. They are also usually kept for longer periods, as they cannot be converted into cash quickly or be used to cover daily expenses.
Tangible assets: Tangible assets are typically ones you can touch and interact with. So, they are often physical and measurable items that a company uses. Tangible assets often provide a way for businesses to operate. Some common examples include cash, supplies, inventory, and equipment.
Intangible assets: Intangible assets are resources that do not have any physical presence. Intangible assets can include copyrights, patents, trademarks, brand equity, intellectual property, and goodwill.
Financial assets: Financial assets represent investments in the securities and assets of other organisations. These assets can include stocks, corporate bonds, and other hybrid securities. Financial assets are generally valued according to their underlying security, as well as supply and demand in the financial markets. They can be bought and sold by traders and investors.

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