What is the Difference Between Assets and Liabilities
Are you interested to know the actual differences between Assets and Liabilities? If yes keep reading here we are going to see the difference between Assets and Liabilities. Welcome to DifferenceSee.com a place where people come to see the differences between things...
Before we start lets see in brif What is Assets and Liabilities.
What is an Asset?
An asset is anything that has value to the owner. Think of an asset as something that puts cash in your pocket or increases your net worth. An asset might be a stock, mutual fund, gold, real estate, rental properties etc.
What is a liability?
Liabilities have future obligations.
Difference between assets and liabilities
In order to build business or personal finance It is important to understand what constitutes assets and liablities. It is useful for personal financial management as well as for business. The difference between assets and liabilities is pretty straightforward.
| Assets | Liabities |
|---|---|
| Assets are the resources you own or control that have value. | Liabilities are the debts you owe money or other assets to a creditor. |
| Assets can either be tangible (e.g. cash, land, buildings) or intangible (e.g. intellectual property, goodwill). | Liabilities can either be current (liabilities to be paid in less than a year) or non-current (liabilities to be paid over a longer period). |
| Assets help you increase your wealth. | Liabilities decrease your wealth. |
| Assets are things that you own | Liabilities are things that you owe |
| Financial assets are things you own that generate a cash flow in the future like stocks, bonds, and real estate. | Non-financial assets are intangibles and do not produce income but they do have value such as patents and trademarks |
Conclusion
Understanding assets and liabilities is important for not only business owner but personal finance also. It helps to understand cashflow.
Hope now you know key differences between Assets and Liabilities. Knowing what your assets and liabilities are will make it easy to manage your money. If you find this Article useful share it with your family and friends let them know the difference between Assets and Liabilities.
