@accountingexpert: Basis Asset Liability Meaning An asset is something owned by a person or business that has value. A liability is something owed by a person or business to others. Ownership Owned by the business. Owed to outsiders (creditors or lenders). Nature Represents future economic benefits. Represents future obligations or debts. Effect on Wealth Increases wealth. Decreases wealth. Normal Balance Debit balance. Credit balance. Shown in Balance Sheet Listed on the left side (Assets section). Listed on the right side (Liabilities section). Examples Cash, Buildings, Equipment, Inventory, Accounts Receivable. Bank Loan, Accounts Payable, Mortgage, Wages Payable, Notes Payable. Accounting Equation Assets = Liabilities + Owner’s Equity. Assets are the resources of the business. Liabilities are part of the accounting equation and represent claims against the business’s assets. Effect if Increased Strengthens the financial position of the business. Increases the amount the business owes. Simple Example If a business owns a delivery van, the van is an asset because it belongs to the business and helps generate income. Summary * Asset = What you own * Liability = What you owe

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Monday 20 July 2026 00:12:32 GMT