What are Assets?
Assets are things a business owns or that are owed to the business.
How it Works
In any business, money or value comes from somewhere.
For example, the business may borrow money.
It may also get goods or services on credit from suppliers.
The owner may also put some of their own capital into the business.
Finally, the business will receive money from sales.
Once received, this money or value goes somewhere—or is used somewhere
Expenses V’s Assets
Some of this money will be used to pay for expenses.
Expenses are those costs incurred in the day-to-day running of a business.
They include things like telephone, rent, wages, and purchases.
The business will pay cash for some expenses.
It will also buy some goods and services on credit.
Regardless of how they are acquired, expenses are fully consumed or used up during an accounting period.
The business will also use money and value to acquire assets.
Some assets will be tangible.
For example, equipment is a tangible asset.
Inventory, too, is a tangible asset
Other assets will be intangible.
For example, a patent is an intangible asset.
Another asset is money held at the bank.
Finally, assets also include money that is owed to the business.
Unlike expenses, assets are not consumed during the accounting period.