Summary of Assets in Accounting

Assets and the Expanded Accounting Equation

  • Definition of Assets: Resources owned by a business with economic value, recorded on the balance sheet.

  • Examples of Assets:

    • Cash (includes currency, cheques, bank accounts, but not cryptocurrencies)

    • Accounts Receivable (money owed by customers for goods/services on account)

    • Inventory (goods available for sale; not applicable to service companies)

    • Supplies (assets until used, then become expenses)

    • Prepaid Expenses (paid in advance, considered assets until utilized; e.g., insurance)

    • Notes Receivable (money owed with interest; includes specific terms)

    • Equipment (long-term assets; e.g., desks, computers)

    • Buildings, Machinery, Land (long-term assets; machinery is specific to manufacturing)

Depreciation

  • Definition: Process of losing value over time, applicable to buildings and machinery.

  • PPE (Property Plant and Equipment): A category including machinery and buildings that are depreciated.

  • Land Treatment: Not depreciated; recorded at historical cost due to complexities in valuation.