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An intangible asset is an asset that you cannot touch. Examples of intangible assets include copyrights,
patents, mailing lists, trademarks, brand names, domain names, and so on.
Often the market value of an intangible asset is far greater than the market value of a company’s tangible
assets such as its buildings and equipment.
Accounting principles require that intangible assets be reported on a company’s balance sheet at cost or
less. Since many intangible assets are not purchased, they may not have a reportable cost. As a result,
many valuable intangible assets are not even reported as assets on the company’s balance sheet.
What is an account?
One definition of an account is a record in the general ledger that is used to collect and store debit and
credit amounts. For example, a company will have a Cash account in which every transaction involving
cash is recorded. If the company sells merchandise for cash, the Cash account will be debited and the
Sales account will be credited.
Another definition of an account is a record of a customer relationship. For example, if a company sells
merchandise to a customer on credit, there seller will have an account receivable and the purchaser will
have an account payable.
The term on account means not for cash. For example, if a company purchases merchandise with the
terms net 30 days, it means the company has 30 days in which to pay.
What is stock?
In accounting there are two common uses of the term stock. One meaning of stock refers to the goods on
hand which is to be sold to customers. In that situation, stock means inventory.
The term stock is also used to mean the ownership shares of a corporation. For example, an owner of a
corporation will have a stock certificate which provides evidence of his or her ownership of a corporation’s
common stock or preferred stock. The owner of the corporation’s common or preferred stock is known as
a stockholder.