As an asset manager, you recognize the importance of asset tracking and accounting, and understand the benefits the right asset management system can offer your organization. However, throughout the asset tracking process, you may have come across some technical jargon that you or others on your team are not quite familiar with. Read on to learn some of the basics, or to brush up on your knowledge of asset management terminology.
Acquisition cost– The cost of an asset before applying sales tax, but after accounting for discounts and incentives.
Asset– Any company resource purchased for long-term use that requires close tracking, with a value that can be measured and expressed in dollars.
Asset management– The process of recording and maintaining accurate physical asset data in order to maximize asset utilization and minimize loss.
Auditor– A person or firm responsible for performing an official examination of an organization’s financial accounts.
Barcode technology– An asset tracking method that utilizes adhesive barcode stickers, each unique and consisting of a group of patterned bars, spaces and/or numbers that, when scanned, are used to identify the item that has been tagged.
Capitalization threshold– The minimum cost at which an asset must be reflected in your accounting records. This threshold may be determined by government regulation, or by the standards set forth by your organization.
Depreciation– A method of allocating a portion of the cost of an asset over the period it can be used. While there are many types of depreciation, the most commonly used is the straight-line method.
Disposal– The process of selling an asset that has reached the end of its useful life.
Ghost asset– A fixed asset that appears on your financial statement, but is no longer in use because it is missing or has been determined unusable.
Governmental Accounting Standards Board (GASB)- The board charged with setting and overseeing standards for state and local governments.
Radio Frequency Identification (RFID) technology– Technology used to identify objects by utilizing data-encoded RFID tags, which are then captured by a reader through radio waves. Unlike barcode technology, RFID can be used to identify objects that are out of vision. For a more detailed look at RFID technology, check out our Quick Guide.
Residual value (salvage value)– The expected remaining value of an asset once it’s reached the end of its useful life.
Spreadsheet– Created using applications like Microsoft’s Excel or Google Drive, companies often use spreadsheets to track assets as an alternative to asset management software. Though a cheaper option, there are many flaws and risks associated with using spreadsheets to manage assets.
Useful life (service life)– An estimate of the duration of time that an asset is forecasted to be in service for the reason it was purchased.
Zombie asset– A capitalized fixed asset that is still in use, but not reflected in accounting records or financial statements.
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