Asset

AAA

DEFINITION of 'Asset'

1. A resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit.

2. A balance sheet item representing what a firm owns.

INVESTOPEDIA EXPLAINS 'Asset'

1. Assets are bought to increase the value of a firm or benefit the firm's operations. You can think of an asset as something that can generate cash flow, regardless of whether it's a company's manufacturing equipment or an individual's rental apartment.

2. In the context of accounting, assets are either current or fixed (non-current). Current means that the asset will be consumed within one year. Generally, this includes things like cash, accounts receivable and inventory. Fixed assets are those that are expected to keep providing benefit for more than one year, such as equipment, buildings and real estate.

RELATED TERMS
  1. Asset Accumulation

    The increase in the value of financial property and investments ...
  2. Active Asset

    An asset that is used by a business in its daily or routine operations. ...
  3. Alternative Asset

    Any non-traditional asset with potential economic value that ...
  4. Contingent Asset

    An asset in which the possibility of an economic benefit depends ...
  5. Asset Valuation

    A method of assessing the worth of a company, real property, ...
  6. Current Assets

    1. A balance sheet account that represents the value of all assets ...
RELATED FAQS
  1. What is the average price-to-book ratio of companies in the retail sector?

    The retail sector includes seven types of retail companies: automotive; building supply; distributors; general; grocery and ... Read Full Answer >>
  2. What is the formula for calculating return on assets (ROA) in Excel?

    Return on assets (ROA) is used in fundamental analysis to determine the profitability of a company in relation to its total ... Read Full Answer >>
  3. What is the difference between a revocable trust and an irrevocable trust?

    An irrevocable trust and a revocable trust are differentiated through the ability to change the trust. With an irrevocable ... Read Full Answer >>
  4. How can I calculate funds from operation in Excel?

    In general, the terms "work in progress" and "work in process" are used interchangeably to refer to products midway through ... Read Full Answer >>
  5. How can a company raise its asset turnover ratio?

    The asset turnover ratio measures a company's efficiency and productivity. A company can increase a low asset turnover ratio ... Read Full Answer >>
  6. Who can attend the meeting of creditors (341 hearing)?

    The meeting of creditors, otherwise known as a 341 hearing, is a mandatory meeting for personal bankruptcy filers. A few ... Read Full Answer >>
  7. What is the difference between an operating expense and a capital expense?

    An operating expense (OPEX) is an expense required for the day-to-day functioning of a business. In contrast, a capital expense ... Read Full Answer >>
  8. How is market to market accounting different than historical cost accounting?

    Historical cost accounting and mark-to-market, or fair value, accounting are two methods used to record the price or value ... Read Full Answer >>
  9. Where did DuPont Analysis come from?

    The DuPont Analysis is a method of evaluating a company's financial performance. It was created in 1920 by DuPont, an American ... Read Full Answer >>
  10. How is asset turnover calculated?

    The asset turnover ratio measures the efficiency of a company's assets to generate revenue or sales. It compares the dollar ... Read Full Answer >>
  11. What is the formula for calculating return on assets (ROA)?

    The return on assets (ROA) calculation is used to analyze a company's ability to generate profits from its assets: ROA = ... Read Full Answer >>
  12. What is double entry bookkeeping and how does it work in the general ledger?

    Double entry bookkeeping is the concept that every accounting transaction has two affects on a company’s finances. The general ... Read Full Answer >>
  13. How should investors interpret accounts receivable information on a company's balance ...

    Investors should interpret accounts receivable information on a company's balance sheet as money that the company has a reasonable ... Read Full Answer >>
  14. What does your net-worth consist of?

    Your net worth consists of your assets less your liabilities. Assets include cash, investments, bank accounts, retirement ... Read Full Answer >>
Related Articles
  1. Investing Basics

    Reading The Balance Sheet

    Learn about the components of the statement of financial position and how they relate to each other.
  2. Personal Finance

    Breaking Down The Balance Sheet

    Knowing what the company's financial statements mean will help you to analyze your investments.
  3. Investing Basics

    Defining The 3 Types Of Investments

    The first step to being a successful investor is knowing what is and isn't an investment.
  4. Retirement

    7 Reasons To Review Or Revise Your Will

    Drafting a will and locking it away for good could negatively affect your beneficiaries.
  5. Budgeting

    Use ROA To Gauge A Company's Profits

    Do you rely too heavily on ROE? Consider using return on assets for a more complete picture.
  6. Retirement

    Estate Planning Basics

    Deciding what will happen to your assets when you pass away is a must - no matter how wealthy you are.
  7. Markets

    Introduction To Fundamental Analysis

    Learn this easy-to-understand technique of analyzing a company's financial statements and reports.
  8. Economics

    Understanding the Top Line

    Top line refers to a company’s gross sales without any reductions for discounts or returns.
  9. Economics

    What's an Allowance for Doubtful Accounts?

    The allowance for doubtful accounts represents the percentage of the accounts receivable the company expects to write-off as uncollectible.
  10. Fundamental Analysis

    Understanding Activity Ratios

    Activity ratios measure how effectively a business uses its assets.

You May Also Like

Hot Definitions
  1. Hedging Transaction

    A type of transaction that limits investment risk with the use of derivatives, such as options and futures contracts. Hedging ...
  2. Bogey

    A buzzword that refers to a benchmark used to evaluate a fund's performance. The benchmark is an index that reflects the ...
  3. Xetra

    An all-electronic trading system based in Frankfurt, Germany. Launched in 1997 and operated by the Deutsche Börse, the Xetra ...
  4. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
  5. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
  6. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!