POSSESSING ASSETS

Assets

Assets Quotes

This video will show you some quotes about assets that will inspires you a lot.

Asset's Past

Expenses vs. Assets

Expenses are less expensive items or services that a company procures in order to run the business. Expenses are typically used within a relatively short period of time. It directly reduce taxable income in the year they incurred if using the accrual method of accounting, or in the year that they are paid if they using the cash method of accounting.

Examples of business expenses include rent, travel, intertainment, utilities, and office supplies.

Rental expense   5000
     Cash                    5000
 

For an Asset: If you purchase an asset receives the debit and Cash frequently receives the credit as shown below.

Equipment       25000
    Cash                 25000

10 Elements of the Finacial Statement

There are 10 Elements of the financial statement

•  Assets
• Liabilities
• Equity
• Investments by Owner
• Distributions to  Owner
• Revenues
• Expenses
• Gains/Losses and lastly the
• Comprehensive Income

https://highered.mheducation.com/sites/.../elements_of_financial_statements.html

What are Tangible Assets in Business?

        Tangible assets are one of two types of assets a business may own. These assets contribute significantly to the value a company has at any given point. Therefore, companies take great care to track and manage the tangible assets they have. By leveraging these assets, companies can remain financially stable and continue operations.

Classification and Examples

        Tangible business assets can vary greatly from business to business, as the the properties each company needs to operate are not consistent. However, tangible business assets generally fall into two main categories: current and fixed. Current assets are assets the business has on hand that are flexible and which the company can liquidate fairly easily, such as funds in a business bank account. Inventory is another good example of a current asset. Current assets often don't depreciate. Fixed assets are just the opposite. They are harder to liquidate and typically do depreciate. Examples in this category include the company's buildings, machinery, land and furniture.

Cash and Equivalents

    C A S H on HAND

These are the cash has not been deposited yet in the bank.

    C A S H in B A N K 

These are the cash that has been deposited in the bank.

    PETTY CASH FUND

Petty Cash Fund are the funds that is incurring an expense below Php 500.00

    PAYROLL FUND 

Payroll is a company's record of its employees's salaries and wages, bonuses and withheld taxes.

Asset Valuation

What is an 'Asset Valuation'

Asset valuation is the process of assessing the value of a company, real property or any other item of worth, in particular assets that produce cash flows. Asset valuation is commonly performed prior to the purchase or sale of an asset or prior to purchasing insurance for an asset. Asset valuation can be based on cash flows, comparable valuation metrics or transaction value.

BREAKING DOWN 'Asset Valuation'

A large portion of financial theory is centered around asset valuation. Assets can include stocks, bonds, buildings, equipment and intangible assets such as brands, goodwill and labor. As a result, asset valuation often consists of both subjective and objective measurements. For example, there is no number on the financial statements that tells investors how much the company's brand is worth; brand is an intangible asset and the valuation is subjective. On the other hand, net profit is an objective measurement based on the company's income and expense figures. If a company is looking to acquire another company's assets, it can look at the book value of assets, the market value of assets, and the transaction or replacement value.

Asset Valuation Methods

When valuing a company, analysts look at the book value of assets and the market value of assets. The book value is generally lower than market value because assets are listed at their historical cost. Common methods for determining an asset's value include comparing it to similar assets and evaluating its cash flow potential. Acquisition cost, replacement cost and accumulated depreciation value are also methods of asset valuation.
One of the most common ways to value assets is based on future cash flows. For example, the value of stock is based on future cash flows from dividends and share price appreciation. The value of bonds is based on the future cash flows of interest payments. The value of commercial real estate is based, in part, on rent. This method only works for assets that produce cash flows. If assets do not produce cash flows, the analyst can conduct a transaction analysis.

Relative and Transaction Asset Valuation

The most liquid assets can be traded on the market and therefore have a market value. Assets that have a market value are valued based on multiples of that value. For instance, stocks are often valued based on a multiple of price to earnings, price-to-book value or price-to-cash flows. These are relative market valuations. Transaction or replacement cost analysis seeks to find deals involving similar assets. This method is good for illiquid assets or assets with no market value. For example, home values go through cycles of demand. The best way to determine a value for your home is to compare it against similar home sales in the same area.

Good Assets to Own in a Depression

Short -Term Investments

• Cash is still your best asset, especially in the event of a job loss. Having three to six months of living expenses set aside can ease stress and worry if something unfortunate happens. And if something drastic were to happen to the national economy, it is wise to have some funds set aside.
  Treasury bonds can also be a good short-term investment, for periods of three, six and 12 months. Try not to tie your funds up for longer periods. However, interest rates fluctuate, and you will want to research the bonds closely before purchasing to make sure this is a good use of your money.

Long-Term Investments

• Gold is considered a solid investment by many investors. It can be purchased in bars or coins of various weights. However, this is an investment that requires a great deal of research, and an asset that may require special storage, causing an expense. Diamonds, jewels, and gold jewelry can be an investment if it is of a good quality, is older (such as an heirloom) and is cared for properly. Investors also will need to ensure proper security to avoid theft, which could be yet another expense.

Real Estate

• Owning your own home or managing rental properties is considered sound during a depression or recession. People--including your family--always need a place to live. When banks are hesitant to lend for a mortgage, the pool of good renters will be higher; tenants are essentially making a house payment for you. Once the rental mortgage is paid off, the rent becomes full profit, less any maintenance that is needed. Although it can be harder to sell real estate during financial challenges, it is still an asset that can be moved if the price is right.

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Assets held for sale

Assets, usually long-term, which one party wishes to liquidate through sales to other parties. An abandoned asset which has no prospective buyers may not be listed as an "asset held for sale".




Source: Business Dictionary

Asset Accounts : List and Explanation

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".

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.

What is assets in finance?

 

 

In financial accounting, an asset is an economic resource. Anything tangible or intangible that can be owned or controlled to produce value and that is held to have positive economic value is considered an asset.