Asset class

    By
    Andrey Orlov
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    754

    What is an asset?

    An asset is any item of value owned by a legal entity. Legal entities include financial institutions and other companies, traders and other individuals and governments.

    The sum of all assets minus the sum of all liabilities (such as debts) of an entity is also called the net worth of an entity. Every asset that can be traded can also be called a financial instrument.

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    Asset classes include:

    Trading asset classes

    Our learning lessons contain helpful information about trading any asset class. If you are completely new to trading, we recommend you to start our beginner strategy on currency trading, also known as forex:

    Forex trading beginner strategy

    Assets for accounting purposes

    On a balance sheet, assets are items that represent what a company owns. The assets are equal to the total of liabilities, common and preferred stocks, and retained earnings. They can include cash and other liquid items, real estate, equipment and plant, intellectual property such as patents, trademarks and copyrights, and even items paid for in advance (or to be paid for in the future), such as rent or insurance. Interest is considered to be an asset, and so is goodwill as it brings value to the business.

    Such assets are then broken down into different accounting categories:

    • Current assets — cash and other liquid items
    • Long-term assets — real estate, equipment, etc.
    • Deferred and prepaid assets — interest, rent, etc.
    • Intangibles — intellectual property and goodwill

    On the balance sheet, assets are considered as either current or fixed. Current assets mean any items that will be used within 12 months, such as cash, inventory and accounts receivable. Fixed assets are long-term and include items such as real estate and equipment.

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