Assets

Definition

Asset is an item generally appearing on the business Balance Sheet. It represents an economic value that can be used by the business to produce revenue and earn a profit.

What It Means

Business assets are valuable possessions that are used in business activities to produce revenues and profits. Typical assets appearing on the are:

  • Cash and short term investments
  • Accounts receivable
  • Inventory
  • Equipment and machinery
  • Business real estate

In addition, a number of important business assets may not appear on the company’s balance sheet:

Similar to the calculation of business value, there are three ways to determine the value of a business asset:

  • Cost approach
  • Market approach
  • Income approach