In Accounting, each of the parts that constitute the general balance or balance sheet of a company is known as assets and liabilities. The assets would be what the company has and the liabilities what the company owes.
The balance is the financial report in which, from the confrontation of the assets with the liabilities, the situation of the assets of a company can be known at a given time.
The heritage, in this sense, is the sum of the contributions from the owners regarding the operating results of the company.
Hence, both assets and liabilities. They are fundamental to the accounting of a company.
As an asset it is called the set of all assets and rights that are owned by a company, institution or individual, which can be converted at any given time into money. Examples of assets would be the furniture, the shares, the products that the company sells or any other type of goods that the company owns.
Types of assets
- Non-current or fixed asset: it is that constituted by goods and rights that are not for sale, but have been acquired for the use of the company, such as machinery, computers, real estate. As such, they depreciate over time.
- Current or current assets: it is one that understands those assets and rights that a company has and that can be quickly converted into money, such as products for sale.
As a liability, it is called the monetary value that, in total, adds up the debts and commitments that a company, institution or individual has assumed with third parties, such as banks, credential entities, suppliers, employees, etc.
Types of liabilities
- Non-enforceable liability: it is that constituted by the company’s own funds, such as its share capital and reserves.
- Liabilities required: is one that includes all of the company’s debts to third parties. They are further subdivided into long-term liabilities, when their maturity is more than one year from the balance sheet date, and short-term liabilities, which are those that must be paid before one year from the balance sheet.