Glossary
Asset
Something the business owns or controls that has value and is expected to bring it future benefit.
What it means
A resource controlled by the business as a result of past events, from which future economic benefits are expected to flow.
Example
A delivery van the business owns is a non-current asset; cash in the bank is a current asset.
Why it matters
Assets sit on one side of the accounting equation. An increase in an asset is a debit, so spotting an asset is the first step in double entry.
In practice
In the ledger, assets have debit balances. On the statement of financial position they appear first. Non-current assets are kept for long-term use, such as premises or a delivery van. Current assets are cash, inventory and trade receivables expected to turn into cash within a year.
Suppose a trader buys a computer for RM3,000 in cash. The computer account is debited RM3,000 and the cash account is credited RM3,000. Total assets stay the same, but their form has changed.
Students often mix up an asset and an expense. An asset gives benefit over several future periods and stays on the statement of financial position. An expense is used up in the current period and is written off to the income statement. The van is an asset; its fuel and road tax are expenses. This decides whether a payment is capitalised or charged against profit.
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Related terms
Syllabus reference: Cambridge 0452 and 0985, syllabus for 2027 to 2029, sub-topic 1.2 The accounting equation (page 11).
Definitions here are general accounting explanations for study. For your board's exact wording, see its official syllabus via Sources.
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