What are Business Assets?

Assets are valuable items that your business uses to make money and grow in the market. Your accountant lists the appropriate assets in your balance sheet annually. This reflects your company’s cash flow and working capital. The information also comes in handy if you want to use secure credit or obtain insurance. A business asset can be physical like computers or non-physical such as intellectual property. 

What Are the Types of Assets?

Accountants generally classify business assets based on three criteria:

  • The value those items provide 
  • Whether those are physical or non-physical assets 
  • How fast can they liquidate to cash?

So, there are four main types of assets involved in businesses. 

Current assets

Current assets refer to those you can convert into cash within a year. Also known as short-term assets, they generate value in the fiscal year itself. 

Examples of current assets

  • Cash 
  • Inventory 
  • Investments 
  • Accounts receivables 
  • Money orders
  • Prepaid 
  • Bank drafts 
  • Deposit accounts 
  • Stock
  • Marketable securities 

Long-term assets 

Long-term assets refer to those you can convert beyond 12 months. Also, known as fixed assets, businesses can use them for years. 

Examples of long-term assets

  • Real estate property 
  • Furniture 
  • Tools and machinery 
  • Patents 
  • Trademarks 
  • Equipment 

Tangible assets 

Tangible assets have a physical existence. 

Examples of tangible assets 

  • Building 
  • Office Supplies
  • Land 
  • Marketable securities 
  • Cash 
  • Raw materials 
  • Tools and software 

Intangible assets 

Intangible assets do not have any physical presence. 

Examples of intangible assets

  • Trademarks 
  • Patents 
  • Intellectual property 
  • Reputation 

What’s an Example of a Business Asset?

Let’s say you run a candy shop which also has an online presence. So your tangible assets would include a physical store and the inventory. Your intangible assets would be your website, social media popularity, logo and customer relationships. 

How are Assets Different From Liabilities?

Both assets and liabilities form an integral foundation for the financial health of your business. But, no, they are not the same. 

Assets are valuable items that your business owns. They provide you with economic benefits in the future. 

Liabilities, on the other hand, are debts your business owes. You need to repay these either in a year or beyond that right after you start the business. 

Which Criteria Makes an Asset?

You should identify and classify your business assets to derive the best value out of them. Here’s what to consider while choosing the asset. 


Your business should have control over the asset. You may own it or co-own it. You should be able to convert it into cash as and when required without any hassle. 


An asset is resourceful. That means it provides valuable resources for your company to generate economic value in the future. 

Economic value 

Assets have a solid economic value. You should consider something as an asset that drives business growth and production. 

An asset creates value in your business. They help generate revenue, run your business and boost the value of your business. 

Why Are Assets Important In Accounting?

Assets form an integral part of business accounting. They help accountants derive the exact value of your business and prepare accurate tax reports. You need both these information to grow and thrive financially in the competitive market. 

Other crucial reasons to record assets in your finance reports are:

  • Helps earn the trust of investors and shareholders
  • This leads to accurate reporting 
  • Reflects the profit the business has earned 
  • It makes your business more trustworthy 

Also, effective asset management shows the net worth of your business. This information comes in handy if you decide to sell or close your business. 

Wrapping Up, 

Assets, if managed efficiently, increase the efficiency of your business operations. You can also use them to reduce tax bills and achieve potential savings. It is equally important to look after the assets as you run your business to prevent safety risks or economic downfalls. Most business owners hire an accountant to manage their assets and record them precisely on the balance sheet. You can do so too to save time.

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