When we cross the bridge in the hospitality financial world to the greater business world, the concept of an asset and how it is used comes full circle. I am going to explore what is unique about hospitality assets and how we record and use them. I am only going to talk about current assets in this article.First of all, an asset is something you have paid for or earned previously that can be used to generate more income. That is the critical test: Can you use this item to make more money, to create more economic activity? If you bought it or created it previously and can use it to generate more income, it is an asset. Items like tenderloin, tequila, guest and city ledgers are all good examples of things you can use to make more $$. You prepare the tenderloin and tequila and sell it for four-six times what you paid for it. You can use guest and city ledgers once they are collected to buy more tenderloin and tequila. And on it goes.An asset is part of the balance sheet and it can travel over to the sister statement, the P&L, as an expense or cost of goods sold. In hospitality, current assets typically consist of cash, accounts receivable, inventory and prepaids. That's pretty much it for a hotel. For sure there are others but on a hotel balance sheet, you will always find these four. In other industries, current assets will be made up of what is unique to that business. If making cars, assets are probably cash, steel, wire, tires. If selling clothes, current assets might include cash, sweaters, and jeans. Each different industry is unique.One thing you will not find that my workshop students find interesting when we talk about assets is people. We always say that people are our number one asset in the hotel business. Brand slogans and company cultures are built on this steadfast ideal. In most cases, it is true that our people are our most valuable asset. However, we do not account for this value on our balance sheets. We do not account or measure this on any device, report, app or valuation. It is sad that we have not figured this one out. Note to self: Think more about how we can do just that, put an economic value on our most important asset.Some unique aspects of hotel current assets that trip people up are the guest ledger and the city ledger. These sound like descriptions of an institution locked in a time warp. Let's demystify them. The word ledger simply means list. The guest ledger is the value of the accounts in-house for all our current guests, their rooms, taxes, restaurant charges, parking, etc. It is a total of what each one owes the hotel while in-house. Imagine if you will that we line all our guests up in the lobby, each one owes us money and the sum of all the guest accounts is the total guest ledger. And guess what? You can use this money to make more money. The city ledger is the value of all the credit arrangements and the resulting billings that the guests and groups have made with the hotel.The city ledger, when you think about it, is unique to the hotel service world. We extend our guests credit! Can you imagine your airline giving you a master account? Never. So why do we extend credit like we do with our guests? The answer is twofold. One, we have always done this. In our business, the practice of extending credit goes back to and beyond time, even before currency. The second more apparent reason is our competition does too. This means we also need to give credit or we risk losing a competitive edge. Now that I think about it, the whole credit world in hotels is ripe for some disruption!Here are some principles to help understand current assets: