An asset is anything that can be used to generate value.
Here are 5 examples of assets:
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- A piece of land with natural resources like timber or minerals.
- A business with valuable intangible assets like patents or copyrights.
- A machine that produces products or services.
- Money in the form of cash, investments, or credit lines.
- Human capital, such as the skills and knowledge of employees
In accounting, assets are items that have value and can be converted into cash. The balance sheet of a company lists all the assets owned by that company. The total value of the assets must equal the sum of liabilities and shareholders’ equity.
There are two main types of assets: current assets and long-term assets.
Current assets are those that will be turned into cash within one year, such as inventory or accounts receivable.
Long-term assets are those that will take longer than one year to turn into cash, such as buildings or machinery.