12 EXAMPLES OF ASSETS

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To run its business successfully, every company needs resources, tools, and equipment.

These items are referred to as assets.

Assets, to put it another way, are economic resources that a company controls as a result of past events and are expected to provide future benefits to the company.

Along with liability and owner's equity, it is one of the three main components of the accounting equation

Because assets are so important to a company's operations, every company has to keep records of them.

An asset account is used to record increases and decreases in the asset of a company.

Assets accounts include

1. Cash: This is the account used to record increases and decreases in the cash balance of a company.

Cash consists of money or any medium of exchange that banks accept at face value for deposits.

It also includes coins, checks, express money orders, money on deposit in a bank, cash on hand and money held in a cash register or safe.

Cash account increase when the company receive cash and decrease when the company pay cash.

It is important to note that cash is the most liquid business asset.

2. Notes receivable: This account is intended to track amounts owed to you in the form of promissory notes.

A promissory note is essentially a written promise to pay a specific amount of money at a specific time in the future.

3. Trade receivables: When a company sell goods on credit, it is recorded in a trade receivables account.

More precisely, trade receivable is the sum due to a business by its customers following the sale of products or services on a credit

When a company sells goods on credit, trade receivables increases, and when a company receives payment from its debtors, trade receivables decreases.

Just to be clear, trade receivable is also called debtors account.

4. Account receivables: This is a company's overall receivables. Included are trade receivables, bills receivable note receivables and other receivables.

5. Prepaid expenses: Often, companies paid for goods and services before receiving or using them. 

These payments made in advance are recorded in the prepaid expenses account.

Prepaid expenses are considered assets until they are used or expire, at which point they become expenses.

Because businesses usually paid in advance for various goods and services, they keep accounts of different prepaid expenses

When a company buys insurance in advance, for example, it is recorded as prepaid insurance.

If a corporation pays its rent ahead of time, it will be recorded as prepaid rent.

6. Land: This is an asset account that is used to record the purchase of property that will be used in the ordinary operations of the business.

It's critical to remember that land is one of the few non-depreciating fixed assets. It rather appreciates.

7. Buildings: Purchases of structures that are going to be used in the business are recorded in an account called Buildings.

Although a building and the land it occupies cannot be separated, it is vital to have separate accounts for lands and buildings.

This is because the building is subject to depreciation, but the land is not.

8. Investments: This is the account for recording increases and decreases in a company's investment.

Investment is used by an entity in generating income from another entity.

The investment account can be divided into two categories:

A. Short term investments: These are investments of a business that matures in less than one year or are easily converted to cash. 

Included are certificates of deposits, stocks of other companies tradable in the stock exchanges. 

Short term investments are recorded in the balance sheet as current assets

B. Long term investments: These are investments that last more than a year. Included are bonds that do not mature in one year.

Long terms are recorded in the balance sheet as non-current assets.

9. Equipment: Companies rely heavily on machinery and equipment to carry out their activities.

The equipment account is used to track the expenditure of a company's machinery and equipment.

The cost of the equipment will depreciate throughout the length of its useful life.

10. Furniture and fittings: This records the cost of office furniture such as desks, chairs, tables etc

Throughout the furniture and fittings' useful life, its cost will be depreciated. 

11. Inventory: This is the accounting that is used to record semi-finished and finished goods available for sale at a particular point in time.

12. Rent receivable: This is the account that records the amount of rent earned but not yet received as of the time of reporting.

Final words

Assets accounts are accounts that are used to record the economic resources owned by a business.

Please note that assets accounts are permanent or real accounts. That is, at the end of the year, their balances are not closed.

Furthermore, assets are one of the three main components of the account equation

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