Business assets are items of value that your business owns, creates or benefits from. Assets can range from cash, raw materials and stock, to office equipment, buildings and intellectual property.
What is an asset in business?
In business terms, an asset is a resource of value that you own or lease that helps you run your business. These resources can be tangible items such as computers and petty cash, or non-physical things such as goodwill, reputation and brand.
In accounting terms, assets are resources that you can sell or convert into cash or use to produce value. For example, your inventory, bank balances, accounts receivable, prepaid expenses, etc.
Assets accounts are an important factor in yourbalance sheet. Depending on how you look at them, assets can fall into different categories.
Categories of business assets
You can generally categorise assets according to their nature and type. Based on their convertibility into cash, you can classify assets as either:
- current assets - those with a shorter life span and easily transferable into cash
- fixed assets - intended for long-term use and unlikely to convert quickly into cash
Another way of grouping business assets is according to their physical characteristics. Under this approach, you can distinguish between:
- tangible assets - the physical, material and financial resources of your business
- intangible assets - resources without material substance, but with clear business value
You can also label business assets as operating on non-operating based on their usage.
List of business assets
Here are some examples of the different types of assets businesses commonly have. Note this list is non-exhaustive and many more types of assets are possible.
Examples of current assets
- cash/cash equivalents
- receivables
- deposit accounts
- money orders
- cheques
- bank drafts
- marketable securities
- investments (short term)
- inventory
- stock
- prepaid expenses
Examples of fixed assets
- property
- plant
- equipment
- tools and machinery
- furniture
- investments (long-term)
Examples of tangible assets
- cash
- stock
- buildings
- land
- office equipment
- machinery
- vehicles
Examples of intangible assets
- intellectual property
- trade secrets
- licences
- franchises
- reputation
- brand
- goodwill
For a successful business, you should ideally own a combination of current, tangible and intangible assets to secure a good cash flow, effective processes and long-term value. See more on the importance of assets in business.
FAQs
When we speak about assets in accounting, we're generally referring to six different categories: current assets, fixed assets, tangible assets, intangible assets, operating assets, and non-operating assets.
What are 5 assets in business? ›
Examples of assets include:
- Cash and cash equivalents.
- Accounts Receivable.
- Inventory.
- Investments.
- PPE (Property, Plant, and Equipment)
- Vehicles.
- Furniture.
- Patents (intangible asset)
When we speak about assets in accounting, we're generally referring to six different categories: current assets, fixed assets, tangible assets, intangible assets, operating assets, and non-operating assets.
What are four 4 kinds of assets? ›
Assets can be broadly categorized into current (or short-term) assets, fixed assets, financial investments, and intangible assets.
What are the assets of a business? ›
For companies, assets are things of value that sustain production and growth. For a business, assets can include machines, property, raw materials, and inventory—as well as intangibles such as patents, royalties, and other intellectual property.
What are your 3 best assets? ›
Your three greatest assets are your time, your mind, and your network. Each day your objective is to protect your time, grow your mind, and nurture your network.
What are the 4 main asset classes? ›
There are four main asset classes – cash, fixed income, equities, and property – and it's likely your portfolio covers all four areas even if you're not familiar with the term.
What are the 6 types of assets? ›
When we speak about assets in accounting, we're generally referring to six different categories: current assets, fixed assets, tangible assets, intangible assets, operating assets, and non-operating assets. Your assets can belong to multiple categories. For example, a building is an example of a fixed, tangible asset.
What are Class 7 assets? ›
Class IV: Stock in Trade (Inventory) Class V: Other Tangible Property, including Furniture, Fixtures, Vehicles, etc. Class VI: Intangibles (Including Covenant Not to Compete) Class VII: Goodwill of a Going Concern.
What is the safest asset to own? ›
Key Takeaways
- Understanding risk, including the risks involved in investing in the major asset classes, is important research for any investor.
- Generally, CDs, savings accounts, cash, U.S. Savings Bonds and U.S. Treasury bills are the safest options, but they also offer the least in terms of profits.
Common things to include in an asset list include:
- Physical assets – including property, vehicles, collectible items of value etc.
- Financial assets – including bank accounts, credit cards, investments, pensions etc.
- Insurance assets – including life, home, health, mortgage etc.
Three of the main types of asset classes are equities, fixed income, and cash and equivalents. For individual investors, these are more commonly referred to as stocks, bonds and cash. An investor's asset allocation, or mix of asset types, is the foundation of portfolio construction.
What are the most valuable assets of a business? ›
Therefore, employees are the most valuable assets an organization has. It's their abilities, knowledge, and experience that can't be replaced.
How do you identify business assets? ›
Business assets are itemized and valued on the balance sheet, which can be found in the company's annual report. They are listed at historical cost, rather than market value, and appear on the balance sheet as items of ownership.
How do you determine business assets? ›
Determine total assets by combining your liabilities with your equity. Since liabilities represent a negative value, the simplest method for finding total assets with this formula is to subtract the value of liabilities from the value of equity or assets. The resulting figure equals your total assets.
What is 6 assets? ›
Within each of these three classifications—convertibility, physicality, and usage—there are two categories, for a total of six categories. There are “current” and “non-current” convertibility assets, “tangible” and “intangible” physicality assets, and “operating” and “non-operating” usage assets.
What are the 5 current assets in accounting? ›
Current assets include cash, cash equivalents, accounts receivable, stock inventory, marketable securities, pre-paid liabilities, and other liquid assets.
What are 4 assets? ›
Here are the most common asset classes, ranked generally from lower to higher risk:
- Cash and cash equivalents. Many investors hold cash as a way of maintaining liquid assets or simply providing safety and comfort in volatile times. ...
- Fixed income. ...
- Real assets. ...
- Equities.
