Accounting equation: Assets

- So what are assets? Well, we kind of have an intuitive sense of this. A formal definition is that assets are resources owned or controlled by a company that will provide probable future benefit. Let's take the simplest example. If you look at the balance sheet of Apple, you can see they've got lots of cash, billions of dollars in cash. Is that a resource that will provide probable future benefit? Yeah, cash is a good asset. But cash is not the only asset. If you are a financial institution such as Wells Fargo Bank or Bank of America, your biggest asset is an asset we call accounts receivable or loans receivable. These receivables represent the expectation that you're going to collect money from people in the future based on contracts that exist in place right now. Now, can a contract, a piece of paper, really be an asset? If I have a piece of paper that somebody has signed where they promised to pay me $10,000 in the…