Asset
What is an asset?
An asset is something the business owns, or is owed.
A delivery van, money in the bank and money that customers owe are all assets.
In the books an asset account goes up on the debit side and down on the credit side.
Example
A bakery owns a van that cost £9,000.00, has £2,400.00 in the bank and is owed £600.00 by customers. Its assets come to £12,000.00.
Why it matters
Assets are one side of the accounting equation. An asset recorded as an expense by mistake makes expenses too high and assets too low.
Practise it
Practise it nowWhat a business has and owes
Ledger Drill is practice, not tax or accounting advice. If this looks wrong, tell us at [email protected].