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Asset Accounts

Assets refer to resources owned and controlled by an entity.


Technically, an asset is defined as a "resource controlled by an entity as a result of past event and from
which future economic benefits are expected to flow to the entity".
By studying the definition above, we can draw important points that would help us understand assets
better.
1. A resource tangible or intangible property that is used by the entity in its activities
2. Controlled by the entity the entity should have ownership and control over the property for it to be
recognized as an asset of that entity
3. A result of past transaction an asset can be acquired through purchase, exchange, rendering of service,
sale of goods, donations, and other transactions or events.
4. Provides future economic benefits the resource is used to contribute directly or indirectly to the
objective of the company of generating profits. A building is used to house a company's operations;
supplies such as paper and ink are used to document business activities; cash is used to purchase
materials and pay for expenses, etc.
Assets are classified into two: current assets and non-current assets. Current assets are those that are
expected to be realized or used within the company's normal operating cycle or 1 year, whichever is
longer. They include properties that are held primarily for the purpose of selling them in the near future. In
essence, current assets are short-term in nature. Non-current assets, on the other hand, are properties
held for a long period of time (i.e. more than 1 year).
Here's a list of asset accounts under each line item, and classified into current and non-current:

Current Assets

1. Cash and Cash Equivalents

Cash on Hand - consists of un-deposited collections

Cash in Bank - made up of bank accounts that are unrestricted as to withdrawal

Short-term cash funds such as Petty Cash Fund, Payroll Fund, Tax Fund, etc.

Cash Equivalents are short-term investments with very near maturity dates making them assets that are
"as good as cash".

2. Trading Securities or "Financial Assets at Fair Value"

Trading Securities are investments in stocks that are held with the purpose of trading (speculative
investments)

3. Trade and Other Receivables

Accounts Receivable - receivables from customers arising from rendering of services or sale of goods

Notes Receivable - receivables from customers which are backed up by promissory notes

Other receivables representing claims from other parties such as: Rent Receivable, Interest
Receivable, Dividend Receivable, etc.

Allowance for Bad Debts - a contra-asset account deducted from Accounts Receivable. It represents the
estimated uncollectible amount of the receivable.

4. Inventories

Inventories are assets that are held for sale in the normal operations of the business. A service business
normally has no inventory account.

Merchandising businesses normally maintain one inventory account Merchandise Inventory.

Manufacturing businesses have several inventories: Raw Materials Inventory,Work in Process


Inventory, Finished Goods Inventory, and Factory Supplies Inventory.

5. Prepaid Expenses or Prepayments

Prepayments consists of costs already paid but are yet to be used or incurred. Common prepaid expense
accounts include: Office Supplies, Service Supplies,Prepaid Rent, and Prepaid Insurance.

Non-Current Assets

1. Property, Plant, and Equipment (PPE) also known as Fixed Assets

PPE includes tangible assets that are expected to be used for more than one year. PPE accounts
include: Land, Building, Machinery, Service Equipment,Computer Equipment, Delivery
Equipment, Furniture and Fixtures, Leasehold Improvements, etc.

Take note that land that is not used by the business in its operations but is rather held for appreciation is
not part of PPE but of investments.

Accumulated Depreciation - a contra-asset account deducted from the related PPE account. It
represents the decrease in value of the asset due to continuous use, passage of time, wear & tear, and
obsolescence.

2. Long-Term Investments

Investment in Long-Term Bonds, Investment in Associate, Investment in Subsidiary, Investment


Property, Long-Term Funds; these are investments that are intended to be held for more than one year.

3. Intangibles

An intangible has no physical form but from which benefits can be derived and its cost can be measured
reliably.

Intangibles include Patent for inventions, Copyright for authorship, compositions and other literary
works,Trademark, Franchise, Lease Rights, and Goodwill.

4. Other Non-Current Assets

Assets which cannot be classified under the usual non-current asset categories

Includes: Advances to Officers, Directors, and Employees not collectible within one year, Cash in Closed
Banks, and Abandoned or Idle Property
There you have a list of asset accounts. Take note that different companies may use different (although
similar) sets of account titles. It will depend upon the company's business and industry, and what specific
accounts were adopted in its chart of accounts.