Crash Course in Accounting and Financial Statement Analysis, Second Edition

Assets Represent the Company’s Resources

To qualify as an asset, the following requirements must be met:

• A company must own the resource.

• The resource must be of value.

• The resource must have a quantifiable, measurable cost.

See Exhibit 6.2.

Exhibit 6.2. Assets Typically Consist of (But are Not Always Limited to):

ASSETS
Cash and Cash Equivalents	Money held by the company in its bank accounts
Marketable Securities (Short-Term Investments)	Debt or equity securities held by the company
Accounts Receivable	Payment owed to a business by its customers for products and services already delivered to them
Inventories	Represent any unfinished or finished goods that are waiting to be sold, and the direct costs associated with the production of these goods
Property, Plant, and Equipment (Fixed Assets)	Land, buildings, and machinery used in the manufacture of the company’s services and products
Goodwill and Intangible Assets	Nonphysical assets such as brands, patents, trademarks, and goodwill acquired by the company that have value based on the rights belonging to that company
Deferred Taxes	Potential future tax savings arising when taxes payable to the IRS are higher than those recorded on financial statements
Other (Miscellaneous) Assets	Items that do not fit into other categories, such as prepaid expenses, or some types of short-/or long-term investments

1. Identifying Assets

Exercise Q1: Which of the following ...