What is the definition of an asset?

• A. Liability
• B. Asset
• C. Income
• D. Equity

Answer: (B)

An asset is something of value that a person or business owns or controls as a result of past events, and from which future economic benefits are expected. This is why the asset option fits best: it describes a resource that can help generate future cash flows or services. In contrast, a liability is a present obligation that will require an outflow of resources; income is the earnings or inflows from operations; and equity represents the owner's residual interest in the assets after liabilities are paid. Examples of assets include cash, accounts receivable, inventory, equipment, and property, which appear on the balance sheet as resources the entity uses to operate and grow.