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Asset and Liability Definitions

5. What is an asset? What is a liability?

6. What is the difference between assets and liabilities?

7. Can an organization operate without current liabilities? Explain.

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The response addresses the queries posted in 673 words with references.

//The given discussion is based on the 'Concepts of Accounting'. Two of the most important concepts of the accounts are the 'Asset' and the 'Liability'. In the first part of the discussion, the meaning and concept of the assets and liabilities are described in detail.//

Asset

An asset is a possession that can be evaluated and assessed in a financial value. Assets come in all kinds of forms. Examples of assets are car, home, education, and clothes. Assets of a firm represent those assets which can be, in the ordinary course of business and can be converted into cash within a period not exceeding one year. Asset can be can be defined as anything owned that has exchange value. It is a valuable or desirable thing. In business and accounting, assets are everything owned by a person or company (What Is an Asset? 2003). Assets are tangible and intangible property that can be converted into cash. It includes intangible valuables like stocks and accounts and notes receivable, whose cash value is not clear until they are sold.

Liability

A liability is defined as a responsibility of an entity arising from past transactions or events. It is the settlement which may result in the transfer or use of assets, provision of services or other yielding of economic benefits in the future. It means the liabilities which are ...

Solution Summary

The response addresses the queries posted in 673 words with references

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