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Importance of Asset and Liabilities
For every organisation, Assets and Liabilities play an important role. Assets are considered as the fixed elements of the Organization and liabilities are kind of obligations that come with the process of the transaction. It needs a certain form of settlement which results in transferring the assets and liabilities. It is all included in the study of the accounting.
Assets: It is a term which refers any item that holds an economic value and provides the advantages to the business in present or in future. It helps the person in the generation of the income for their respective business. It also holds importance at the time of calculation of profit or loss of the business. The asset is being mentioned in the company balance sheet. It can be in the form of cash, land or building.
What are the different forms of assets?
- Fixed income
- Cash at bank
- Tangible assets
- Intangible assets
Current asset: It is that asset which business owns and converted into the cash within a year.
Main examples of current assets are:
- Cash at bank
- Trade Debtors
Fixed Assets is something that business owns and used it in a business.
- Fixtures and Fittings
It is an obligation that comes basically in the form of a loan. It is that amount which is owed by the organisation to supplier, banks or any provider of services or goods.
What is the use of Study of Assets and Liabilities?
The success of any organisation depends basically on how the current assets managed by the person who is running the organisation in the context of accounting. Liabilities are the obligation that is considered as a legal debt.
Liabilities and assets assist a person in studying the accounting of a company and it will also help in preparing the annual reports of the company. Targets of an organisation set on the basis of counting of Assets and Liabilities. Assignment of a student may be related to preparation of balance sheet, so the experts offer help in the same. If you have knowledge about Assets and Liabilities, then can easily analyse which items will fall under assets and which will fall under liabilities.
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