Difference Between Assets And Liabilities

Difference Between Assets And Liabilities

The main dissimilarities or difference between assets and liabilities can be pointed out as follows:

1. Definition

Assets: Tangible or intangible resources or properties possessed by a firm which generates income

Liabilities: Amount of debt or financial obligation which should be paid off in the future

2. It Is

Assets: Properties that a business firm Owns
Liabilities: Debts that a business firm owes

3. Balance Sheet Record

Assets: Recorded on the asset side (right side)

Liabilities: Recorded on the liabilities side (left side)

4. Depreciation

Assets: These are depreciable items

Liabilities: Liabilities do not depreciate

5. Classification

Assets: Fixed and current assets

Liabilities: Current liabilities and long-term liabilities

6. Nature

Assets: May be tangible or intangible in nature

Liabilities: Intangible in nature

7. Cash Flow

Assets: There will be cash inflow

Liabilities: There will be cash outflow

8. Determination/Formula

Assets: Liabilities + Shareholders equity

Liabilities: Assets - Shareholders equity

  Also Read: 

Difference Between Debt And Equity

9. Fictitious

Assets: May be

Liabilities: No

10. Examples

Assets: Land, building, machinery, investments are some of the examples of assets

Liabilities: Long term and short term loans, sales taxes, notes payable, outstanding expenses are some of the examples of liabilities.

Assets Vs Liabilities (Comparison Chart)

Basis For Difference	Assets	Liabilities
Introduction	Company's properties or resources that generate income	Financial obligation or debt of the company
Refers To	Property	Debt
Balance Sheet Record	Right Side	Left Side
Depreciable Or Not	Yes	No
Classification	Fixed assets and current assets	Current and long term liabilities
Nature	Tangible or intangible	Intangible
Cash Flow	Inflow	Outflow
Formula	Liabilities + shareholder's equity	Assets - shareholder's equity
Examples	Machinery, building, land etc.	Term loans, sales tax, notes payable etc.

I hope this post is helpful to understand the difference between assets and liabilities and to make comparison between them.