Assets and Liabilities

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Current Assets
Cash, accounts receivable, inventory, marketable securities, prepaid expenses

Non-Current Assets
Property, plant \& equipment (land, buildings, machinery), long-term investments

Tangible Assets
Vehicles, furniture, equipment, real estate

Intangible Assets
Patents, trademarks, goodwill, copyrights

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Fixed Assets

• Land
• Buildings
• Machinery
• Vehicles
• Furniture
• Office equipment
• Computer hardware
• Tools
• Software
• Leasehold improvements

Variable Assets

• Cash
• Accounts receivable
• Inventory
• Raw materials
• Prepaid expenses
• Marketable securities

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Company liabilities represent debts and obligations owed to creditors, suppliers, or other parties. They split into current (due within 1 year) and non-current (long-term), with some contingent types.


Types of Liabilities in a Company

Current Liabilities (due within 12 months)

1. Accounts payable
2. Wages/salaries payable
3. Taxes payable (income, sales, payroll)
4. Accrued expenses/interest
5. Short-term loans
6. Unearned/deferred revenue
7. Current portion of long-term debt

Non-Current Liabilities (due after 12 months)

1. Long-term loans/bonds payable
2. Mortgages
3. Lease obligations (beyond 1 year)
4. Deferred tax liabilities
5. Pension/retirement obligations
6. Notes payable (long-term)

Contingent Liabilities (potential obligations)

1. Pending lawsuits
2. Product warranties
3. Loan guarantees
4. Environmental cleanup costs

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[amh]

What is assets?

Assets are resources owned or controlled by a business or individual that have economic value and can generate future benefits, such as cash flow or cost savings. They appear on the balance sheet and represent ownership value that can often be converted to cash
Assets = Liabilities + Equity - The Fundamental Accounting Equation

What is Liabilities?

Liabilities are financial obligations or debts a company owes to others, such as suppliers, lenders, or employees. They represent future cash outflows and appear on the balance sheet opposite assets

What is equity?

Equity is the owner's residual claim on a company's assets after all liabilities are subtracted.

• Owner's claim on assets after paying all debts
• Formula: Assets - Liabilities = Equity
• Shows true business value to owners
• Increases with: profits, new owner investments
• Decreases with: losses, dividends, withdrawals

Assets:

• Cash,

• inventory

• equipment

• property

Liabilities:

• Loans

• accounts payable

• bonds

Equity:

• Owner's initial capital contributions

• Retained earnings (accumulated profits)

• Additional paid-in capital

• Less: Dividends and owner withdrawal

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Asset liquidation is the process of selling or converting a company's assets into cash, typically during business closure, bankruptcy, or restructuring. The cash generated pays creditors first, with any remainder distributed to owners

When It Happens

• Business insolvency: Can't pay debts, so assets sold to settle obligations

• Voluntary closure: Owners decide to wind down operations

• Restructuring: Sell non-core assets to improve cash flow

• Distress sales: Quick liquidation often at discounted prices

Process Order

• Inventory (easiest/fastest to sell)

• Equipment/machinery

• Real estate/buildings

• Intangible assets (patents, trademarks)

• Priority: Secured creditors → unsecured creditors → shareholders

Key Point
Liquidation value is usually less than book value because assets sell quickly under pressure, not at optimal market prices