What is an Asset?

The accounting equation indicates how much of the assets of a business belong to, or are owned by________.

The Owner

The cost of an asset can include...

- Purchase price, - Import duties, -Transport costs to get it to your premises, - Installation or set-up costs.

What is the test of whether something is considered an asset for your business?

1. Does your business own/control it? 2. Will it bring your business benefits in the future? 3. Can you value it accurately?

Assets can only "belong" to what 2 type of people?

1. people outside the business you owe money to (liabilities) 2. the owner himself (owner's equity)

Give the accounting equation for Assets

ASSETS = EQUITY + LIABILITIES

What is another name for debtors?

Accounts Receivable

A possession of a business that will bring the business benefits in the future, adds future value.

An Asset

How do you show the financial position of a business?

By comparing the three elements, assets, owners equity and liabilities to one another.

Where the total debts of the business are greater than its assets, we say the business is __________________.

Insolvent The business cannot pay all its debts, and thus a TERRIBLE financial position.

Give some examples of assets.

Land, a computer, motor vehicle, cash, a debtor

What do you call the owner's share of the assets of a business?

Owner's Equity (or just Equity)

Debtors

People that owe your business money and the value of these debts as a whole.

What is an asset?

Resources owned by a business.

What is the basic rule about how one values any asset?

The cost of an asset includes all costs necessary to get it to the business premises and into a condition in which it can be sold.

The higher the net worth of a business is, the better financial position the business is in. True or False

True

Employees can even be assets. True or False

True, but employees are actually NEVER included as assets in accounting, but only because we can't value them.

Owner's Equity

the residual interest in the assets of the enterprise after deducting all its liabilities.