What are assets?
Assets are everything your business owns that carries economic value and is expected to bring future benefit: cash in the till, stock in the warehouse, equipment, and money your customers still owe you.
Types of assets
| Type | Meaning | Examples |
|---|---|---|
| Current assets | Convert to cash within a year | Cash, inventory, receivables |
| Fixed assets | Used in operations for years | Equipment, vehicles, furniture, buildings |
| Intangible assets | No physical form | Brand, software, licences |
Where assets sit in the equation
Assets = Liabilities + Equity
Put differently: everything you own is financed either by debt owed to others, or by the owners' own money.
A common mistake
The cash in your till is not the wealth of the business. You can hold a large amount of stock and very little cash, leaving assets high and liquidity low. That is why assets are always read alongside liabilities.
Frequently Asked Questions
Yes. Inventory is a current asset because you own it and expect to convert it into cash within the operating cycle by selling it.
Current assets are expected to convert to cash within a year — cash, inventory, customer debts. Non-current assets stay longer than a year, such as equipment, vehicles and buildings.
Yes, and it is called accounts receivable. It is money owed to you by others, so it counts among your assets even before you collect it.
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