Assets in accounting are resources owned or controlled by a business, individual, or entity that have monetary value and are expected to provide future economic benefits

. They represent anything of value that can be used to generate revenue or reduce expenses and appear on a company's balance sheet, contributing to its overall worth and operational capacity

Key Characteristics of Assets:

• Owned or controlled by the entity
• Have economic value or intrinsic worth
• Provide future benefits beyond the current accounting period

Types of Assets:

Assets are broadly classified based on their nature and liquidity: 1. Current Assets

• Short-term resources expected to be converted into cash or used within one year
• Examples: cash, accounts receivable, inventory, prepaid expenses

2. Non-Current (Fixed) Assets

• Long-term resources used over multiple years to generate revenue
• Examples: property, plant, equipment, buildings, land
• Subject to depreciation to allocate cost over useful life

3. Tangible Assets

• Physical assets with a measurable presence
• Examples: machinery, vehicles, buildings, inventory

4. Intangible Assets

• Non-physical assets that provide economic value through rights or privileges
• Examples: patents, trademarks, copyrights, goodwill
• Can be amortized over their useful life similar to depreciation

5. Financial Assets

• Investments such as stocks, bonds, and securities that are often liquid and valued at market price

Formal Accounting Definitions:

• IFRS defines an asset as a present economic resource controlled by the entity as a result of past events with the potential to produce economic benefits

• US GAAP defines it as a present right to an economic benefit

In summary, assets are essential accounting elements representing valuable resources a business owns or controls, categorized mainly by their liquidity, physical presence, and role in operations, and they form one side of the fundamental accounting equation: Assets = Liabilities + Equity