What are assets?

The things that are owned by any business organization are known as assets. In order for an item to be considered an asset, it must meet two requirements: (1) it must be owned by the organization, and (2) it must have money value. Ownership is the exclusive right to possess, use, enjoy, and dispose of property. Money value exists if a buyer is willing to pay a sum of money to a seller for the property.

KEEP TRACK OF ASSETS
Since there apparently are many different kinds assets, how does the accountant keep track of all of the assets? The accountant does not keep track all of them individually, but rather combines assets of a similar nature into common groups. For example, an individual or business organization may have such assets as coins, bills, money orders, and checks. These assets would be placed in a category or grouping known as cash. Thus, any money, regardless of its actual form, would be known and categorized as cash. Cash also includes money in bank accounts of the business organization that is available for payment of bills. It is the responsibility of the accountant to follow generally accepted accounting principles in placing individual assets in a specific and appropriate category.

Understanding Accounting

What is accounting?

Accounting is the art of organizing, maintaining, recording, and analyzing financial activities. Accounting is generally known as the "language of business". The accountant translates this accounting information into meaningful terms that are used by interested parties. Every organization- profit, nonprofit, charitable, religious, or governmental - requires the services of accountants in providing accounting information.

Who uses accounting information?

Accounting information is used by everyone. The manager of an organization, who is charged with the responsibility of seeing that the enterprise is properly directed, relies upon the accounting information provided to make appropriate decisions. Investors in an enterprise need information about the financial status and future prospects of an organization. Bankers and suppliers grant loans and extend credit to organization based on their financial soundness evidenced by accounting information. Even customers and employees concerned about the condition of an organization make use of accounting information.

What information does an accountant gather?

The accountant keeps track of all business transactions. A business transaction is any business activity that affects what a business owns or owes, as well as the ownership of that business.