Earning assets are the assets that earn and generate income for the owner just in the same way as done by interest or dividend. In most of the cases earning assets don’t require any ongoing from the owner of the assets or in certain cases a very little work is required. The example of the earning assets can be the internet bearing asset, CDs, dividend stocks, preferred stocks, bonds and related kind of financial instruments are known as the earning assets.
Importance of Earning Assets
Earning assets important for both the individuals and the companies as for individual the earning assets help in planning retirement where as for the companies and the business entities the earning assets act as instruments that result in depositing excessive cash. Banks and other financial instruments offer a number of different kinds of earning assets. The supply of the earning assets by the banks depends upon the reserve that banks have with them. This is the reason due to which the reserve requirements affect the rate of interest on the earning assets or other kind of investments.
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