What are the Different Assets and Liabilities?
I’m going to take the tack that you know the difference between what an asset is ( something you own) and liabilities (something you owe), and that your question could be rephrased as “ What are the different categories within assets and liabilities?”
Assets consist of these catetorgies:
- Cash and “near cash” like certificates of deposit, savings accounts, etc.
- Short term investments in financial instruments, such as stock, bonds, etc.
- Accounts receivable from customers
- Other things that will soon be converted to cash or used up, like supplies, receivables from employees, short term notes receivable
Property, Plant & Equipment or Fixed Assets:
- Buildings and land
- Equipment, furniture, tools with a value over that which would be just written off as expense ( ex: not likely that you would capitalize things like small tools, or waste baskets)
- Notes and other receivables with a maturity of more than 1 year
- Long term investments in stock, bonds, and other financial instruments.
- Deposits, such as a rent deposit
- Patents, copyrights and other “claim of rights”
- Goodwill — an amount paid in the past to acquire another business, after analysis, the difference between what you paid and the fair market value of the tangible assets (which values have been shown in their appropriate categories above)
Liabilities can be classified into these main categories:
Current Liabilities — amounts that must be paid within a year
- Accounts payable — bills that haven’t yet been paid
- Accrued payables — amounts owed for which a bill hasn’t been received, including things like payroll taxes due, sales taxes withheld and payable, payroll accrued, etc.
- Short term notes payable
- Current portion (the part that’s due within a year) of long term debt
Long Term Debt — debt which is due longer than a year
- Long term notes payable
- Mortgages, debentures and other long term debt
There you have it, pretty much a list of where things go on the balance sheet. It’s interesting to note that on the asset side, we distinguish between cash and near cash ( current assets), fixed assets (which are more distinguishable by their physical presence), and that broad category of “other” which includes both financial things, like deposits, and intangible assets like copyrights and goodwill. Three very distinct categories as opposed to only two on the liability side.
The one area we have not discussed here is the “Equity” — that’s the residual amount, formulated by the famous equation Assets = Liabilities + Equity. Equity can be divided and classified into many different categories, depending upon the form of organization, and the particulars of the company, but that is a story for another day.