In accounting and business terms, students might have come across these terms, assets and liabilities. Assets comprise of such items that can be comprehended as the components of the property, which a company or an individual owns. They possess a certain worth and which can be used to meet their respective accountabilities such as commitments, legacies and debts. Liabilities refer to the accountabilities of an entity or individual, which is necessary to be accomplished.
What are Assets?
The economic value of an item which is possessed by the enterprise is referred to as Assets. To put it in other words, assets are those items that can be transformed into cash or that generates income for the enterprise shortly. It is useful in paying any expenses of the business entity or debt.
What are Liabilities?
The economic value of an obligation or debt that is payable by the enterprise to other establishment or individual is referred to liability. To put it in other words, liabilities are the obligations that are rising out of previous transactions, which is payable by the enterprise, through the assets possessed by the enterprise.
This article is a ready reckoner for all the students to learn the difference between Assets and Liabilities :
|Meaning||The economic value of an item which is possessed by the enterprise is referred to as Assets||The economic value of any obligation or debt owed by the enterprise to any other establishment or individual is referred to as a liability|
|Calculation||Assets = Liabilities + Owner’s Equity||Liabilities = Assets – Owners Equity|
|Position in Balance Sheet||Right||Left|
|Types||Non-Current Asset, Current Assets||Non-Current Liabilities, Current Liabilities|
|Example||Cash, Account Receivable, Goodwill, Investments, Building, etc.,||Bank Overdraft, Account Payable, Long term borrowings, etc.,|
The above mentioned is the concept, that is elucidated in detail about ‘Difference between Assets and Liabilities’ for the Commerce students. To know more, stay tuned to BYJU’S.
Additional Reading: List of Current Assets
Frequently Asked Questions
What Are The 4 Types Of Assets?
- Tangible Assets
- Intangible Assets
- Financial Asset
- Fixed Assets
What Are The Classification Of Assets?
Assets can be classified into 2 major classes: tangible assets and intangible assets.
State 1 Difference Between Goods And Assets.
- An economic goods is a tangible article or service that has meaning to people and can be traded for a non-negative value in the marketplace.
- Assets incorporate various items like fixed assets, current assets and investments. Some are tangible and some are intangible.
Give 4 Examples Of Liabilities.
- Notes Payable
- Accounts Payable
- Salaries Payable
- Wages Payable
Are Assets And Expenses?
Expenses are recorded as a debit to an expense account (an income statement account) and a credit to either an asset account or a liability account, which are balance sheet accounts.