Asset vs Liabilities
What are Assets?
Assets are tangible or intangible things that are owned or resources that can be accessed. in other words assets are something you own outright the has economic value or resources that you have access to that have economic value.
Assets put money in your pocket or create economic value for you. Assets is either owned or controlled by you. Assets have a present value with the potential for a future benefit.
Types of Assets
Current Assets
Current assets are short term assets that are converted into cash in the short term. An example of this would be a job. The work is turned into a paycheck.
Fixed Assets
These are assets that have a long term monetary value, but will not likely be converted into cash in the short term. Examples of these are automobiles or houses. Fixed assets can depreciate which means they can lose value.
Financial Assets
These kinds of assets are classified also as securities such as stock, bonds or mutual funds, etc.
Intangible Assets
An asset that is an economic resources that has no physical present is called an intangible asset. Trademarks and copyrights are examples of these kinds of assets.
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What are Liabilities?
A liability is something that you owe. Liabilities are the other side of assets. Your liability is someone else asset. Liabilities are expenses. They take money out of your pocket.
Liabilities create monetary obligations either short term or long term. Unlike assets liabilities do not depreciate in time.
Although liabilities are not assets they can be used to create assets. Liabilities are best when they are used to create, sustain or protect assets.
Types of Liabilities
Current Liabilities
These kinds of liabilities are short term obligations. The are obligations that are due within a year or an operating cycle. Most current liabilities are due monthly.
The best example of this type of liability is credit card debt. Another example would be owed taxes such as income or property. Also insurance is a current liability.
Fixed Liabilities
A fixed liability is a long term liability or financial obligation that exceeds a year. This may include a mortgage, car note or bank loan. Fixed or long term liabilities is what hinders or cripples most people financially.
Another thing that hinder people financially is there current liabilities become fixed liabilities. For example their short term credit card debt become long term death. All liabilities equate to risk
