Assets and liabilities

Introduction

You guys might have always heard this term asset and liabilities and you always have a reason to escape yourself from these important topics.

Some of you say this belongs to commerce so we have no idea about it.

Some of you say you forget that.

Some of you normally say I don't know about this.

And I believe that there is no mistake from your side.

As our education system is classified and limited to their boundaries.

The financial literacy rate is very low here; only 24% of the entire population is financially literate and the rest, which is about 76 %, is still financially illiterate.

Assets

In very simple terms assets are things which I own or which belong to us if it is in a business.

Asset could be anything like car, building, land, my cash,

Copyrights, my investment in shares, etc.

These assets are further more divided into tangible and intangible assets.

Tangible assets are assets which can we see and touch.

And intangible assets are those which we cannot touch like copyrights, trademark, patents, goodwill these are the assets but we cannot touch them.

Tangible assets includes like current assets and noncurrent assets.

As the name suggests current assets are those assets which can be used within the period of one year.

Like cash ,inventory, stock, bills receivable etc.

While non current assets are those which will continue for more than one year. Like land, building, car etc.

We cannot finish them in the period of one year so it comes under non current assets.

Liabilities

In simple terms, liability is whatever I owe is part of my liabilities.

Anything which I need to pay or  I am liable to others is my liabilities.

Liabilities could be loan, creditors, borrowings , outstanding expenses etc..

Liabilities same divided into two parts like current liabilities and noncurrent liabilities.

Current liabilities are those for which we are liable for one year of time. Like short term loans, borrowings for short term, outstanding expenses, etc

Non current liabilities are those for which we are liable for more than one year. like long term borrowings, long term loan..etc..