Assets and liabilities - are two basic concepts of accounting

click fraud protection

Accounting is a kind of an information system, whose main task is to display information about the course of business with the aim of further analysis and decision-making.Assets and liabilities are the basic concepts of accounting.In this article we will discuss the meaning of these terms, and why they are so important.

As you know, one of the main accounting documents of the company is the balance sheet, which has sections of "active" and "passive."In the "active" displays all the property owned by the company - Fixed assets, capital goods, low-value items, money in the accounts and on hand, accounts receivable and so on.All assets are owned by the company and are recorded in the balance after a pass assessment procedure is different for each type of property.

obvious that no property can not be acquired for free, without the use of any means.That is why the section "liability" includes all sources of the company's assets.These sources can be divided into two large groups: the capital of the company (the amount of money and the value of assets provided by the founders as the initial deposit) and its liabilities - accounts payable, payable on settlements with suppliers, governments and hired staff.

Now let's try to understand why the main document is called a "balance"?Why is it so important is the balance sheet?Understanding this will help, oddly enough, the physical law of conservation of matter, the basic essence of which can be transmitted by the phrase "nothing comes out of nowhere and disappear into nowhere."With regard to accounting, the acquisition of any property asset should entail a corresponding change in liabilities.For example, by getting the money as a loan, on the one hand, the article will appear in the asset "cash account", but also liabilities in the article "accounts payable."If, however, then this money will be acquired by other assets, such as stocks, there will be a transfusion between articles "money in the account" and "financial investments", but the assets and liabilities of the balance will still be equal.It is this equivalence and shows that all the statements are correct and there are no errors in the display of business activity of the company.

Thus, assets and liabilities - is, in fact, two sides of the same coin, but versatile shows the side that applies only to the acquisition and ownership of property, and versatile - the one that is connected to the source, through which the company receives a newproperty.Respect for equality of assets and liabilities is an important task of any accountant because a discrepancy of two sections of the balance shows that he made a mistake.Find the error in the balance is quite easy - just find the difference between assets and liabilities, and that amount divided by two.The resulting figure will be the sum of the errors, upraised by mistake in the wrong section.However, this method is effective only in case, if you make just one mistake - otherwise inconsistencies search may take a long time, and possibly drawing up of the document will have to start over again.

We hope to have informed readers exhaustive information on what is an asset and a liability.Remember, the equality of the two sections of the balance of the main accounting principles and the main feature of proper accounting in the enterprise.We wish you to assets and liabilities in your balance is always converged penny to penny !!!