A present economic resource controlled by the entity as a result of past events.

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Assets refer to resources owned or controlled by a business that have economic value. They can be tangible, such as equipment and inventory, or intangible, such as patents or goodwill. Assets are recorded on the balance sheet and can be classified as current (expected to be converted into cash within one year) or non-current (long-term assets held for more than a year).

Example: A bakery owns a commercial oven and delivery vans.These are tangible assets because they directly contribute to revenue generation. Additionally, the bakery holds exclusive rights to a secret cakerecipe, classified as an intangible asset, giving the business a competitive advantage in the market. Both types of assets are crucial in determining the bakery's overall financial health.