List Of Assets And Liabilities In Accounting Pdf
Accounting is the process of recording, classifying, and summarizing financial transactions to provide accurate financial information to the stakeholders of a business. Assets and liabilities are two important components of accounting that are essential for any business to function. Assets are resources owned by a company, while liabilities are obligations owed by a company. In this article, we will discuss the list of assets and liabilities in accounting pdf.
Assets in Accounting
Assets are resources that provide future economic benefits to a business. They are classified into two major categories: current assets and non-current assets.
Current Assets
Current assets are assets that are expected to be converted into cash within the next 12 months. They include:
- Cash and cash equivalents: This includes physical cash, bank deposits, and other highly liquid investments that can be easily converted into cash.
- Accounts receivable: This is the amount of money owed to a business by its customers for goods or services provided on credit.
- Inventory: This refers to the stock of goods that a business holds to sell to customers.
- Prepaid expenses: These are expenses that a business has paid in advance, such as rent or insurance.
Non-Current Assets
Non-current assets, also known as fixed assets, are assets that are not expected to be converted into cash within the next 12 months. These assets have a long-term useful life and are usually held for more than one accounting period. They include:
- Property, plant, and equipment: This includes land, buildings, machinery, and any other assets used in a business's operations.
- Intangible assets: These are assets that do not have a physical substance, such as patents, trademarks, and goodwill.
- Investments: These are long-term investments in stocks, bonds, or other securities.
Liabilities in Accounting
Liabilities are obligations that a business owes to others. They are classified into two major categories: current liabilities and non-current liabilities.
Current Liabilities
Current liabilities are liabilities that are due within the next 12 months. They include:
- Accounts payable: This is the amount owed by a business to its suppliers for goods or services received on credit.
- Short-term loans: These are loans that are due within the next 12 months.
- Accrued expenses: These are expenses that have been incurred but not yet paid, such as salaries and wages.
- Income taxes payable: This is the amount of income tax owed by a business to the government.
Non-Current Liabilities
Non-current liabilities, also known as long-term liabilities, are liabilities that are not due within the next 12 months. They include:
- Long-term loans: These are loans that are due after the next 12 months.
- Bonds payable: These are long-term debt securities issued by a business.
- Deferred income taxes: This is the amount of income tax that a business will pay in the future.
Conclusion
Assets and liabilities are important components of accounting that help businesses to understand their financial position. While assets provide future economic benefits, liabilities are obligations that a business owes to others. By understanding the list of assets and liabilities in accounting pdf, businesses can make informed decisions about their finances and plan for the future.
