In accounting, what is defined as a resource with economic value owned or controlled by an entity?

An asset is defined as a resource with economic value that is owned or controlled by an entity. This definition underscores the role of assets in the financial health and operational capabilities of a business. Assets are crucial for generating revenue and supporting the core activities of the entity. They can take various forms, such as cash, inventory, property, or investments, and they contribute to the overall value of the organization.

Assets are typically recorded on the balance sheet, reflecting their importance in providing insights into the entity's financial position. Understanding what constitutes an asset helps in evaluating the financial performance of a company, as well as in making informed investment decisions. In contrast, liabilities represent obligations that the entity needs to settle in the future, equity reflects the ownership interest in the company, and capital generally refers to financial resources available for use in production or to fund operations. Therefore, the definition highlights why assets are foundational to accounting and finance.