For many people, the details of their financial life can bring them down, confuse them and make them complacent and afraid to act. Still, finances are important to the future of all different income levels. Understanding what assets are and how they work for you is imperative to controlling your financial future. Below are the definitions of what an asset is and an explanation of the different types.

What is an Asset?

An asset is basically anything of worth belonging to a person or a business. Your home is an asset. For businesses, the buildings themselves are assets, any merchandise the company owns, inventory, and much more can be considered assets. There are three main types of assets as categorized by “Accounting Basics,” an article within Accounting for Windows. These three assets include current assets, fixed assets, and intangible assets. Below are definitions of each.

Current Assets

One of the first types of current assets is cash. Cash includes money that is being held in accounts, such as checking accounts and savings accounts. Then there are “marketable securities.” Marketable securities include bonds, stocks and other investments. There is also Accounts Receivable and Notes Receivable in this category, which are basically funds due from clients or customers. Inventories and prepaid expenses, such as supplies on hand are also part of current assets.

Fixed Assets

Fixed assets refer to those things that are tangible, in other words, those that physically exist. These include equipment, fixtures, land, buildings etc. The items in this section must be tangible, long-lived, used in the business, and not for sale. These items may lose value as they undergo the wear and tear of usage and time.

Intangible Assets

Intangible assets are in many ways the opposite of fixed assets. They are not tangibles such as land or buildings. Intangible assets can often provide great value for a company or business. Examples of intangible assets include copyrights, trademarks, patents or other non material valuables such as these that translate into monetary worth.