Assets, Liabilities & Capital


Assets are things that a company owns and are sometimes referred to as the resources of the company.

The properties used in the operation or investment activities of a business.

Assets include tangible and intangible items. Tangible items can be physically seen and touched such as vehicles, equipment and buildings. Intangible items are like pieces of paper (sales invoices) representing loans to your customers where they promise to pay you later for your services or product. Some examples of business type assets are cash, debtors, stock of goods, land, and equipment.


Liabilities are obligations of the company; they are amounts the business owes to others as of the balance sheet date.

Another liability is money received in advance of actually earning the money.

Usually one of a business’s biggest liabilities is to suppliers where a business has bought goods and services and charged them. Some examples of business liabilities are outstanding expense accounts, creditors, and mortgages.

It represents the owner’s rights to the property (assets) of the business. Capital is the monetary value of the part of the business which belongs to the proprietor. In other words what the business owes the owner, that is the amount left for the owner after all liabilities (amounts owed) have been paid.

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