Accounting Concepts – What are Assets and Liabilities?

Accounting Equation Definition

Today I I will explain two other accounting concepts, the asset and the liability. Assets are all the assets and rights that the company has at any given time. But what are assets and rights? Goods are everything that has economic value and can be converted into cash, such as real estate, vehicles, machines, etc. The rights refer to the resources that the company has to receive and that will generate benefits present or future. Representing the right to demand something, for example, the amount a store will receive from a credit sale. The customer has already taken the goods, but have not yet paid, so the store has the right to receive the amount due.

Assets can also be classified as current and non-current. Current assets are all assets and rights that can be consumed or converted into money in the short term, that is, until the end of the fiscal year following the Balance Sheet, such as cash, inventories and accounts receivable in the short term term. Non-current assets are all assets and rights that the company will not be able to convert into cash in the short term, normally considered a year, for example, real estate, machinery and equipment, furniture, brands and patents Liabilities Liabilities represent the company’s obligations, that is, debts in a certain period.

And it is also divided between current liabilities and non-current. Current liabilities are represented by all accounts payable in the short term, such as salaries and charges, suppliers, loans and financing to be paid in the short term. And non-current liabilities represent all long-term accounts payable, for example loans, dividends and taxes to be paid paid in the coming years.