Types of Assets & Liabilities

Liabilities

What your business owes

Fixed Assets

AKA Non-Current Assets

Assets

All the resources your company possesses

Assets are designed:

to be continuously used to generate value for business owners

What do assets have in common?

* Assets have a positive cash value * You can sell them for cash * Assets are controlled by your company * Assets are used to produce a product or service

Types of Current Liabilities

Accounts Payable Short-Term Liabilities

Types of Current Assets

Cash Prepaid expenses Accounts receivable Inventory

Forms of cash

Coins Currency Cash in checking accounts Cash in savings accounts Bank drafts Money orders Petty cash

Two Major types of Liabilities

Current Liabilities Long-Term Liabilities

Long-Term Liabilities

Debt lasting over one year, such as a mortgage. Used to purchase major assets such as equipment and property.

Define Current Assets

Expected to be liquidated (converted to cash) within one year.

Types of Intangible Assets

Goodwill Intellectual Property Trademarks Licensing Agreements

Advantages of Long-Term Liabilities

Growth & lower interest rates

Short-Term Liabilities

Loans due within one year, usually short term bank loan. Ensure that the business has enough cash to continue operating and minimize the risk of running out of cash

Fixed Assets Definition

Not expected to be liquidated within one year

Types of Tangible Assets

Property Plant Equipment

Two Categories of Fixed Assets

Tangible & Intangible

Accounts Payable

Usually due within 30 days, and owed to suppliers for good or service