An asset is anything of value that your business owns or controls. Assets are listed on the balance sheet and include cash, receivables, inventory, equipment, property and intangible items.
Assets are one of the three main components of the balance sheet (along with liabilities and equity). They represent everything your business owns that has economic value. Assets are classified into two main categories: current assets (expected to be converted to cash within 12 months, like cash, receivables and inventory) and non-current assets (long-term resources like property, equipment and intangible assets). Understanding your asset base is crucial for business decisions - it affects your borrowing capacity, insurance needs and business valuation. Assets must be recorded at their cost (or fair value for some types) and reduced over time through depreciation or amortisation. The asset register is an important record that tracks all significant business assets, their cost, depreciation and current book value. SortBooks correctly categorises asset purchases in Xero and ensures they appear on your balance sheet rather than being incorrectly expensed.
SortBooks helps with the bookkeeping behind asset by connecting to your Xero account and using AI to suggest the right account for transactions sitting in catch-all accounts, learning from your own past coding. Instead of fixing asset by hand, you review each suggestion, approve it, and SortBooks updates Xero, GST code included. Then ask the AI CFO about your numbers, using live Xero data.
A liability is a financial obligation your business owes to another party. Liabilities are listed on the balance sheet and include loans, accounts payable, tax payable and accrued expenses.
Equity represents the owner's residual interest in the business after all liabilities are deducted from assets. It includes contributed capital, retained earnings and reserves.
The balance sheet is a financial statement that shows your business's assets, liabilities and equity at a specific point in time. It follows the equation: Assets = Liabilities + Equity.
Depreciation is the accounting method of allocating the cost of a tangible asset over its useful life. It reduces taxable income each year and reflects the asset's declining value.
Current assets are resources your business expects to convert to cash, sell or consume within 12 months. They include cash, accounts receivable, inventory and prepaid expenses.
Connect Xero, check the AI's suggestions and approve the changes. SortBooks updates Xero for you.