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Friends today we’re going to learn topic which is known as as it Assets vs liability and
we are going to learn some of the top 9 differences at some infographics so
let’s start and begin that the asset vs has liabilities at the very first and
cents we need to learn couple of things Assets and liabilities they both are the
main component of every business so there are basically you can say two
elements are I mean those two elements are different in nature the purpose of
both both of them is to increase the lifespan of the business so now
according to the accounting standard the assets are recorded are something
basically that provides future benefit to the business and that’s why business
consultants encourage businesses to build assets and reduce expenses on the
other hand the liabilities are something that you are obligated to pay off in the
near or the distant future so the liabilities are formed because you
receive service product now to pay off later
so in this tutorial will go through a comparative analysis of asset versus
liability and would look at different aspect in length we’ll start with the
difference as it was his liability the first and the foremost difference is
then is the mean assets provide future benefit with a business and liabilities
are the obligations to the business so whatever future benefit that you receive
is its from the assets when the liabilities are basically an obligation
that you need to pay in for the business in the future course so these are the
top differences you can say the first that is the meaning part let’s move to
the next depreciation assets are depreciable but liabilities are not
appreciable it is as simple as that you know as such like you know land does not
remember one thing land is not at all or appreciable asset so this thing has to be taken care of and there’s one more thing that you
know you know what we were supposed to talk is building furniture all this sort
of assets engines let’s say of planes so all these assets are depreciable assets
so on this the precision will be charged depreciation means let’s say today the
value is 100 and the depreciation rate is the wear and tear in the asset is
10% so 100 we will reduce 10% so let’s say this was the amount
standing as on 2016 so this will be a month that will be standing on 2017
again on this because you are following a WTV method will be applying 10% on this and our among for 2018 is going to be 81 so this is how
the depreciation is charged right so this is only possible in case of asset
but not in case of liabilities liabilities are completely non depreciable
right no increase in the account if an asset increased asset is increase it
would be what it would be debited and if the liability is increase it would be
credited it is as simple as that let’s say if you buy a furniture right
so the furniture account will be debited account debited to cash right let’s say
you bought it for $2,000 now in case you’re paying of the liability let’s say
to do kg traders so kg traders has been has been now paid off
now instead of furniture the first case you know when you bought the furniture
instead of paying the cash you thought that you know I’m not being cash right
now I’ll pick now I’ll pay the amount after 1 month so it will be
outstanding right – let’s say kg trade-ins from whom you bought such
furniture so it is outstanding so you you see the asset as increase it
the better the liabilities will be is in increase it is credited but when you pay off when
you pay off your creditors so your liability will be debited the kg traders
will be debited to your cash that you are paying through so I hope you must
have got the idea increase in the account if an asset has increase it
would be debited if the liabilities increase it will be credited now
decrease in the account if the asset is decreased it would be credited and if
the liabilities decrease it would be debited we just learned over here we’ll
carry on with the example to understand this over here the asset increased
because we bought the asset and the liability increased we credited so asset
debited over here and liability credited this is in case of increase in asset and
liability okay this is in case of increase in asset and liability now
let’s see a different scenario over here here the liability reduced so the
liability reduced let me just overhear right
asset as increased liability as increased liability it could decrease
asset decrease so over here we are reversing your the liability has
decreased and asset is also been decrease so liability has been debited and asset has
been credited right we are just reversing the transaction that is what
is here what is written here now the types asset can be classified under many
types tangible and intangible current assets and fictitious assets let me
define you the terms now there is a thing called tangible assets tangible
assets are those assets that you can touch you know that you can see and
touch like you know building and machinery you have furniture all of
these assets are something that you can see and touch so that’s why they are
tangible there are some asset which are intangible assets those assets are like
you know your goodwill then you have what we say copyright something that is
not visible but still it is an asset okay something that that that you cannot
touch but still it is an asset right goodwill in copyright patent trademark
these are all sort of your intangible assets and we had current as well as non
current current assets are those assets which can be realized into cash within
less than 1 year of timespan and non current assets are opposite of current
assets as simple as that liabilities can be classified under
current and long-term current means if it has to be realized in 1 year then
current if not then it is long-term now the cash flow part
it turned rates cash flow over the years absolutely and it flush out the cash
outflow over the years absolutely you know the assets are going to help you to
increase your or generate the cash flow over the years it is going to increase
the cash from your company and over here it is going to reduce them now the
equation this is very important assets is equal to liabilities plus shareholders
equity your balance sheet looks something like this
this is your liability part and this is let’s say your asset part if this is
100 in total then this has to be 100 and liability includes your
current liability plus your shareholders equity right so this has to be 50/50 and
the net should be 100 so asset is equal to liability plus shareholders
equity and liabilities is going to be you just need to rearrange the equation
a simple is done the format we present the current assets first and then the
non current assets over here we present the current liability first and then the
non current liabilities placement in the balance sheets assets are placed first
liabilities are placed after the total assets are completed so let me conclude
our our difference differences between assets and liabilities session assets and
liabilities are part of and parcel of the business without creating assets no
business can perpetuate at the same time no if the business doesn’t take any
liability then it will not be able to create any leverage for itself so if the
assets of the business are properly utilized and liabilities are are taken
only to acquire more assets a business will thrive but that doesn’t always
happen because of the uncontrollable factor the business faces and that’s why
along with generating cash flow from the main business organization should also
invest in assets which can generate cash flow for them from various sources like
for an individual the secret to wealth is to create multiple streams of income
and organization as well and multiple streams of income which are necessary so
as to fight the unprecedent events in near future thank you everyone for
joining the sessions so that’s it for this particular topic if you have
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