Definition of asset
1 assets plural a : the property of a deceased person subject by law to the payment of his or her debts and legaciesb : the entire property of a person, association, corporation, or estate applicable or subject to the payment of debts
3a : an item of value ownedb assets plural : the items on a balance sheet showing the book value of property owned
4 : something useful in an effort to foil or defeat an enemy: such asa : a piece of military equipmentb : spy
Examples of asset in a Sentence
The state's natural assets include mountains and beautiful lakes.
rumors persisted that CIA assets were behind the coup d'état
Origin and Etymology of asset
Financial Definition of ASSET
What It Is
An asset is an economic resource that a) can be owned, and b) is expected to provide future economic benefits.
How It Works
A company lists its assets on its balance sheet. Common asset categories include cash and cash equivalents; accounts receivable; inventory; prepaid expenses; and property and equipment. Although physical assets commonly come to mind when one thinks of assets, not all assets are tangible. Trademarks and patents are examples of intangible assets.
[InvestingAnswers Feature: Ten Things You Need to Know About Every Balance Sheet]
Assets are presented on the balance sheet in order of their liquidity. Current assets, which are expected to be consumed or converted to cash within one year, are listed at the top. Cash, short-term investments and inventory are examples of current assets.
Long-term assets, or fixed assets, are expected to be consumed or converted to cash after one year's time, and they are listed on the balance sheet beneath current assets. Property (such as office space or buildings) and equipment are common long-term assets.
Investors buy assets with the understanding that assets should hold, or even better, grow their economic value over time. Common asset classes for individual investors include stocks, bonds, cash, foreign currencies, collectibles, precious metals, real estate and commodities. A collection of assets is called a "portfolio," and it is widely believed that an individual's portfolio should include assets from several different categories, a process called "asset allocation."
Why It Matters
Assets create or preserve wealth, making them of utmost importance to both individuals and companies.
Financial analysts are encouraged to carefully study a company’s financial statements, including the balance sheet. By using the practice of ratio analysis, an analyst can determine how good a company is at using its assets to generate wealth for shareholders. Read on to learn how to use the following ratios:
[InvestingAnswers Feature: Financial Statement Analysis for Beginners -- The Balance Sheet]
ASSET Defined for English Language Learners
Definition of asset for English Language Learners
: a valuable person or thing
: something that is owned by a person, company, etc.
ASSET Defined for Kids
Definition of asset for Students
1 : someone or something that provides a benefit Your sense of humor is an asset. She is an asset to the class.
2 assets plural : all the property belonging to a person or an organization
Legal Definition of asset
1 : the entire property of a person, business organization, or estate that is subject to the payment of debts —used in plural — compare equity
2 : an item of property owned admitted asset : an asset allowed by law to be included in determining the financial condition of an insurance company — compare nonadmitted asset in this entry appointive asset : an asset in an estate that is to be distributed under a power of appointment capital asset : a tangible or intangible long-term asset especially that is not regularly bought or sold as part of the owner's business; specifically : any asset classified as a capital asset by law (as section 1221 of the Internal Revenue Code) current asset : a short-term asset (as inventory, an account receivable, or a note) that can be quickly converted into cash equitable asset : an asset especially in an estate that is subject to the payment of debts only in a court of equity fixed asset : a tangible asset (as a piece of equipment) that is of a permanent or long-term nature intangible asset : an asset (as goodwill or a patent) that does not have physical form marital asset : an asset acquired by either spouse or both spouses during a marriage Editor's note: Marital assets are generally subject to equitable distribution on divorce. net assets 1 : the excess of assets over liabilities —called also net worth 2 : admitted assets considered as a whole net quick assets : the excess of quick assets over current liabilities nonadmitted asset : an asset not allowed by law to be included in determining the financial condition of an insurance company because it cannot be quickly converted into cash without incurring a loss — compare admitted asset in this entry quick assets : cash, accounts receivable, and other current assets except inventories tangible asset : an asset that has physical form and is capable of being appraised at an actual or approximate value wasting asset : property (as a copyright or oil well) that will eventually expire or be used up and lose its value
Origin and Etymology of asset
back-formation from assets, singular, sufficient property to pay debts and legacies, from Anglo-French asetz, from Old French asez enough
Seen and Heard
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