Asset

What does it mean?

Any resource with an economic value can be termed as an asset. Assets entail future benefits and thus increase the value of the owner. 

Owners use assets in various ways. They are used to reduce expenses, facilitate cash flow generation or sales improvement. Assets must be logged in the balance sheet. There are majorly four types of assets, current, fixed, financial and intangible. 

Points to remember:

  • Assets are considered unique to the owner. Hence, the right over an asset is legally enforceable.
  • The use of an asset is at the discretion of the individual, organisation or entity who owns it. 

Example: Stocks are financial assets which economically benefit the owner.