What are assets in financial terms?

Assets, in financial terms, refer to property and possessions that hold value and can be used to settle debts. This includes various forms of wealth such as cash, real estate, vehicles, investments, and personal items that can generate economic benefit. The value of these assets can be liquid (easily converted to cash) or illiquid (not easily converted to cash). Having assets is essential for an individual's financial health, as they provide a means to pay off liabilities and can be a source of income or wealth accumulation over time. This concept highlights the importance of ownership and potential economic utility in personal finance.

In contrast, personal liabilities and debts represent financial obligations rather than assets, while income generated from employment refers to earnings rather than holding value in property or possessions. Checks and money orders in circulation do not constitute assets in the personal sense, as they are payment instruments rather than items of value owned. Thus, the definition of assets correctly captures their role in financial stability and strength.