What are assets?

Assets (definition)

Assets are the resources owned by a business. They are the opposite of liabilities, which are what the business owes.

Business assets can include property, equipment, cash, accounts receivable, inventory and raw materials – as well as intangibles such as trademarks, patents, royalties, and other intellectual property.

The assets of a plumber might include:

  • their building (if owned, not rented)
  • products and parts (inventory) that they will sell to customers
  • equipment such as tools, workbenches, shelving, office furniture, computers
  • cash in the bank and accounts receivable

What are assets in accounting?

Assets add value to a business and help it operate. They are one side of the accounting equation. The more assets surpass liabilities (money owed), the more the business is worth.

Accounting equation shows assets equal the sum of liabilities plus owner’s equity

The accounting equation

Types of assets

Assets can be:

  • current or fixed – current are expected to be used or sold within a year while fixed are resources for long term use
  • tangible or non-tangible – tangible are physical assets while non-tangible are non-physical such as copyrights

See related terms

Handy resources

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Fixed assets in Xero

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This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.