Asset & Liability 101

Asset & Liability 101

  • Post author:
  • Post category:101

The Significant Differences Between Asset & Liability 

So, what is an “ASSET” and a “LIABILITY”?

An asset is any resource used to produce goods or services. Examples of assets are buildings, machinery, land, and stocks.

A liability is any debt or obligation that a company owes to others. Examples of liabilities are accounts payable and long-term debt.

the difference between assets and liabilities

Assets are things that make you money. Liabilities are things that cost you money.

It is essential to know how to manage your assets and liabilities to maximize your company’s net worth.

Some examples of assets include:

-Marketable securities

-Real estate




-Trading accounts

Some examples of liabilities include:

-Accounts payable (short term)

-Accounts receivable (short term)

-Bank loans (long term)

The Primary Differences Between Accounting for Assets and Liabilities 

Accounting for assets and liabilities are two very different things. Assets are something that a company owns, while liabilities are debts that the company owes.

The accounting process is also different. For assets, the focus is on how much they cost to own and how much they’re worth. For liabilities, it’s about how much they cost to owe and how long it will take to pay them off.

There are a few primary differences between accounting for assets and liabilities:

– Assets have a net worth, whereas a liability doesn’t

– Assets have an original cost, whereas a liability doesn’t

– Assets have an asset value whereas a liability doesn’t – A company can acquire more assets than it can acquire liabilities

3 Distinct Differences Between Assets And Liabilities on Balance Sheets

On a balance sheet, an asset is defined as any resource that a company owns and can use to generate revenue. A liability is an obligation of the company that must be paid in the future.

A balance sheet lists all of the assets and liabilities of a company at a specific point in time. Most Assets are separately listed on one side, and liabilities are listed on the other. The other difference between assets and liabilities; is that assets increase on a balance sheet when they are purchased, while liabilities increase when they are incurred.