What is the difference between a company's assets and liabilities?
Verified 19 November 2020 - Directorate for Legal and Administrative Information (Prime Minister)
The assets and liabilities constitute the 2 parts of the assets of a commercial enterprise. They must appear in the form of 2 columns in its balance sheet and allow to evaluate its value by distributing the inflows and the outflows of funds.
The asset includes all property and rights owned by the enterprise: buildings, business funds, equipment, claims, patents filed, for example.
It distinguishes between fixed assets (e.g., trade funds, equipment) and current assets (e.g., stocks, personnel, receivables, bank balance, credit).
Assets have a positive economic value (input of resources).
Liabilities consists of equity (fixed liabilities) and debt (current liabilities).
In contrast to assets, liabilities have a negative economic value (outflow of resources).
In a normal accounting balance sheet, the asset must always equal the liability.
where the cash on the liability is greater than the cash on the asset, the undertaking is in default.
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