Asset

For a person, assets include savings, shares, retirement accounts, a home and a car. For a business, assets include cash, inventory, machinery, buildings and amounts customers still owe it. In accounting, an asset is a resource the business controls as a result of past events and that is expected to bring future economic benefits.

Assets are often grouped by how quickly they can be turned into cash. Current assets, such as cash, inventory and receivables, are expected to be used or converted within about a year. Non-current assets, such as buildings and equipment, are held for longer.

Not all assets produce income. A share that pays dividends or a rental flat that brings in rent generates cash. A car or a personal home usually does not, and a car typically loses value each year. Some people therefore distinguish between assets that grow or pay you and those that mainly cost money to keep.

Assets are one side of the basic accounting relationship: what you own, minus what you owe, equals what is truly yours. That remaining amount is called equity for a business, or net worth for a person.