Assets, Liability, and Equity in
Accounting
Assets
Asset is any resources with financial value in a company. There is a broad range of assets that your
business may own, create, or benefit from, including real estate, cash, office equipment, goodwill,
investments, patents, inventory, and so on. Your balance sheet lists all of your company’s assets and
explains how they are financed. Whether through debt, equity, or owned outright.
Current assets
Current assets are assets that can be converted to cash or cash equivalents within the space of one
year. They are also referred to as “liquid assets” owing to their importance for your business’s
liquidity.
Here are some examples of current assets:
Cash and cash equivalents
Accounts receivable
Inventory
Short-term investments
Fixed assets
Fixed assets are assets that cannot be converted to cash or cash equivalents within the space of one
year. They are also referred to as “non-liquid assets” or “long-term assets.”
Here are some examples of fixed assets:
Real estate
Equipment, tools, and machinery
Furniture
Long-term investments
Tangible assets
Tangible assets are assets with some kind of physical presence.
Here are some examples of tangible assets:
Real estate
Cash
Office supplies
Vehicles
Equipment, tools, and machinery
Intangible assets
Intangible assets are assets that aren’t physical but offer long-term value to your company.
Here are some examples of intangible assets:
Trademarks
Brand recognition
Goodwill
Research and development
Liabilities
Liabilities are any debts your company has, whether it's a bank loans, mortgages, unpaid bills, or any
other sum of money that you owe someone else. If you’ve promised to pay someone a sum of money
in the future and haven’t paid them yet, that’s a liability.
Current Liabilities
Currents Liabilities are any outstanding bill payments, payables, taxes, unearned revenue, short-term
loans or any other kind of short-term financial obligation that your business must pay back within the
next 12 months.
Here are some examples of current liabilities:
Accounts payable
Principal and interest on a bank loan that is due within the next year
Salaries and wages payable in the next year
Income taxes payable
Mortgages payable
Payroll taxes
Long-term liabilities
Long-Term Liabilities are any obligations, payables, loans and any other liabilities that are due more
than 12 months from now.
Here are some examples of long-term liabilities:
Principal and interest payments due more than a year from now
Bonds, debentures and long-term loans
Deferred tax liabilities
Lease payments that aren’t due for more than a year
Pension obligations
Mortgage, equipment and other capital payments that aren’t due for more than a year
Equity
Equity is the amount of money that a company's owner has put into it or owns. On a company's
balance sheet, the difference between its liabilities and assets shows how much equity the company
has.
Here are some examples of equity:
A share of ownership in a company, shown by a stock or other security.
Shareholders Equity
Actual property value.
Risk Capital or Liable Capital
