What is considered an asset in accounting is not a consistent thing. For example, one person’s asset is another person’s liability. Assets and liabilities are not necessarily the same thing, though they often are when you are talking about business. The two concepts are simply used to refer to a thing that you own or have control over. In other words, your home is your asset. Your company’s assets include the stock it has issued, its property and equipment, and so on.
Liability, on the other hand, refers to what you owe (the amount you think you owe). You may be owed money by a customer, but this does not mean that your company owes money to the customer. Your assets, of course, represent the money that you personally have invested in the business. Your liability is the money you owe to a third party.
One asset in accounting that is frequently discussed is the intangibles of the business. These are the particular things that make the business what it is. The intangibles, of course, are what makes the business what it is. They include the people who run it, its location, the quality of its goods and services, and so on. Sometimes, the intangibles can be regarded as the company’s core business, and sometimes they only constitute a part of what is considered an asset.
An asset may be something that you do not own but that you have control of. Examples include your company vehicles. If you know that your vehicle will last for years without needing repairs, then you might consider keeping it. Likewise, if you know that you are likely to have problems with your computer and network that you have total control over, then you can keep these assets as well.
A common example of what is considered an asset in accounting is goodwill. Goodwill is an asset because it is worth something, even though the owner did not earn it. For example, a janitor who cleans office buildings is valuable because he knows how to get the building dirty and how to get the traffic to see the offices clean. His skill allows him to interact with clients on a regular basis, and he is valued for this. Similarly, intangibles like plant trees, the equipment used to care for those plants, and so on, are assets because they add value to the company without compensation to the owner.
Another example of what is considered an asset in accounting is intellectual property, which usually refers to proprietary information produced by the company. Some examples include the blueprints for the building of a particular car, or the procedures used to maintain the performance of an internal computer network. Intellectual property rights can be enforced through contracts, licensing, or ownership of a company’s property. This asset may also include technology, which means anything manufactured or developed by the company and/or its customers and/or employees.
Another type of what is considered an asset in accounting is the intangible asset. Intangible assets include information systems, process or procedure manuals, software applications, training and education materials, property, and the goodwill of the company. The intangibles are particularly valuable because they are difficult to replace, even if the company decides to do so. Examples of intangibles that can be sold are customer relationships, patents, and technology. However, intangible assets can also be bought or sold under limited circumstances. An employee’s talent can often be converted into cash, while a research facility can be sold if the operation is no longer needed by the company.
There are many other types of what is considered an asset in accounting. They include intangible assets, fixed assets, revenue recognition, financial liabilities, fixed assets, accounts receivable, accounts payable, and accounts receivable balance. All of these categories are important because they help a business determine the worth of their resources. They allow companies to make decisions about when to sell their assets and when to reinvest them in their operations. Knowing what is considered an asset in accounting can help a company maximize its profits, especially if the information on the balance sheet is accurate.