Assets and Liabilities Made Easy

What are assets and liabilities?

Firstly, an asset is a valuable resource that is owned by a business for future benefit. 

Secondly, a liability is the amount of money a business owes.

Your assets should outweigh your liabilities!

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Types of assets

The three basic types of assets are;

Current assets include assets such as cash or inventories that will be converted into cash within the next year.

Fixed assets include assets such as buildings and machinery that the company may own and will not be converted into cash within the next year.

Intangible assets, such as IP and branding, that cannot be physically touched.

Types of liabilities

The two types of liabilities are;

Current liabilities are the debts and financial obligations of a company that will be repaid within the next year. Accounts payable and accrued interest, wages, and taxes can all be considered current liabilities.

Non-current liabilities are the debts and financial obligations that will not come due within the next year. Common non-current liabilities are long term debt, pensions, and provisions.

To find out more about the accounting industry and the qualities you need to succeed as an accountantget in touch with Kilcoyne Accountants today. You can also find us on Facebook.

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