Continuation of the Key terms for the Cash & Accrual Bases Accounting…….
The Assets- the assets are generally those possessions of an individual that have a good market value or are quite valuable. Assets are mainly classified into three types-
Current Asset- the cash is the most basic asset of any individual. The money that is being held in accounts like the checking and savings accounts is also included in the cash. Also inclusive are the marketable securities in the form of bonds, stocks, shares etc. The money lent or payments due from clients even form a part of it.
Fixed Asset- comprises of all the tangible valuable things like property, machines, equipments, land and the like that are not meant to be sold. Intangible Asset- incorporates all the untouchable things like copyrights, patents, trademarks etc. that have tremendous monetary significance. The law of opposites governs the nature; where there are assets, there will be liabilities. These are the debts that you have to pay back to your creditors. This can be done through giving cash or any other asset like jewelry, some other goods etc. Liabilities again are of two kinds-
The Current Liabilities- the liabilities that are to be paid back within a certain time limit and most often through your current assets. These include the accounts payable i.e. type of bill that you have to monthly, the Notes Payable-loans taken from banks meant to be repaid within 30 days and the Accrued Expenses- the compulsory expenses like taxes, wages, interests etc. where the bills are not received but the balances of each must be repaid.
Long Term Liabilities- those debts that can be repaid at ease for the tenure is more then a month.