An asset can be defined as value of any thing which is physically owned by business firm for the benefit of the firm. Asset helps the firm for inflow of the funds. In simple words, there are some items available in a business firm which can fetch an amount as shown in the books after they are sold in the open market.
In broader sense, if we see that there are so many items, not physically available with firm as shown in balance sheet even then they are treated as good assets. For example sundry debtors, loans given, deposits with banks, balance of current account with bank, advances given to employees or to supplier of goods or services, security deposits.
On other side the, the example of some physically available assets are:- cash, inventories, machineries, building, furniture, motor vehicles, air conditioners etc.
Assets can be divided in following forms:-
- Tangible assets:- which have physical existence.
- Intangible asset:- means a right owned by a firm for the future benefits of firm.
- Current Assets:- the assets which are consumed within twelve months or the value of these assets keeps on changing throughout the financial year.
- Fixed assets:- the assets which are consumed in more than twelve months.
- Net assets:- means the value of total assets minus liabilities on the date of valuation.
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