What is asset and liability? What are subcategories and formula to determine asset and liability?

Question

Accepted Answer

Assets are resources owned by a company, while liabilities are obligations or debts. They have subcategories and formulas to determine their values.

Assets are economic resources that provide future benefits to a company, such as cash, inventory, or property.
Liabilities are obligations or debts that a company owes to external parties, such as loans or accounts payable.
Subcategories of assets include current assets (e.g., cash, accounts receivable) and non-current assets (e.g., property, plant, equipment).
Subcategories of liabilities include current liabilities (e.g., accounts payable, short-term loans) and non-current liabilities (e.g., long-term loans, bonds).
The formula to determine assets is Assets = Liabilities + Equity, where equity represents the owner's interest in the company.
The formula to determine liabilities is Liabilities = Assets - Equity, where equity represents the owner's interest in the company.

Accepted Answer

Assets are resources owned by the Company that has economic value and can be used to generate Income.

Liabilities are obligations or debts owned by a company to others.

Sub Categories of Assets:

Current Assets: Assets that are expected to be converted to cash within one year. such as Accounts Receivables.

Fixed Assets: Assets that are long-term useful life and are not intended for resales such as property, Plant, and Equipment.

Sub Categories of Liabilities:

Current Liabilities: Liabilities that are due within one year. Such as Accounts Payable, Short-term loans.

Long-Term Liabilities: Liabilities due beyond one year. Such as Long Term loans and bonds.

Formula to determine Assets: Asstes= Liabilities+Equity

Formula to determine Liabilities: Liabilities = Assets-Equity

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