An asset is any property or object of value that an individual or corporation owns.
Assets can be classified as tangible or intangible. Tangible assets are those that are physical, such as cars, houses, bags, jewelry, and cash. Intangible assets are the things you own but cannot touch, such as patents, brands and royalties.
Assets can also be classified depending on the use and how soon they will be converted into cash and/or use:
Fixed assets. Assets of this type are used by businesses to generate profit. Assets falling under this category include property, plant and equipment.
Investments. These assets are meant for growth and not meant to be disposed of any time soon. Investments assets can take the form of securities, fixed assets, and funds.
Current assets. These includes cash as well as any other assets that are expected to be used up or converted in to cash within a year. Examples of current assets include current and deposit accounts, short-term investments, supplies, and prepaid expenses. Note though that prepaid expenses only appear as assets until the product or service is used or consumed, after which adjustments need to be made in the balance sheet.
When it comes to accounting, the term assets can lead to confusion because it no longer simply implies ownership of something of value but refers to the equation “equity plus liabilities,” hence denoting the overall financial status of an individual or corporation instead of just a listing of property owned.