Asset Account Type

An Asset account will typically have a debit balance at the end of each month. In simple terms, an Asset is something that you “own”. Examples of assets are:

• Bank account balances that would be reflected in the National Bank-Checking account or the National Bank-Savings account.
• Amounts that customers owe you that are recorded in the Accounts Receivable account.
• Items that are held for resale or for future use that are in the Inventory account.
• Prepaid Expenses (property taxes or license fees) that are paid in one accounting period but are expensed in future periods.
• You may also have amounts that you have paid that relate to future periods but do not "roll over" quite as directly as property taxes or license fees. For example, you might have a Prepaid Rent account in your general ledger.
• Fixed Assets such as:

• Machinery

• Buildings

• Office Equipment

• Deposits - amounts paid to a vendor to be applied to future purchases, such as a utilities deposit – or amounts held as a security deposit, such as a security deposit with a landlord for rented property.

To further simplify the concept, if this doesn’t quite make sense yet, an asset is something that you can sell. People will give you money if you give them your asset. For example - property taxes. If you sell your property the buyer will usually reimburse you for the portion of the year that you have paid the taxes for.

If you stick with these two thoughts (“own” and “ability to sell it”), you should be able to easily identify your assets.

Usually these items will be further classified by the accountants as Current and Non-Current. For purposes of preparing account reconciliations, this doesn’t make any difference.

NOTE: The reason it is important to classify an account as an Asset for RecWizard purposes is that the “normal balance” will always be a debit.