What are assets?

The definition of assets focuses on resources that a business owns, which hold economic value. These resources could be cash, inventory, property, equipment, or anything else that can be used to generate future economic benefits. Assets are fundamental to a company’s financial health and are key indicators in assessing its overall value.

When interpreting the nature of a business’s financial situation, understanding assets is essential. They contribute to operational capabilities, as well as future revenue generation. Assets can either be current, intended to be converted into cash within a year, or long-term, used over a longer period.

In the context provided, other options describe different elements of a business's finances, such as liabilities (which represent obligations), income (which reflects revenue flow), and expenses (which are costs incurred during operations). However, only the option that characterizes assets aligns correctly with their purpose and definition in financial statements.