Asset
Definition
An asset is something the business owns or has a right to that has value. Cash, equipment, inventory, and money owed by customers are all assets.
Example
Northstar Creative has $8,500 in checking, $2,400 in Accounts Receivable, and $5,000 of equipment. Total assets are $15,900.
Why It Matters
Assets tell the bookkeeper and business owner what the business has. Tracking them correctly is essential for an accurate Balance Sheet.