hello everyone hi welcome with the channel of WallStreetmojo Friends today
we're going to learn a topic which is known assets vs liabilities and we are
going to learn some of the top 9 differences at some infographics so
let's start and begin with the asset vs liabilities at the very first in
sense we need to learn couple of things asset in liabilities they both are the
main component of every business so there are basically you can say two
elements are I mean those two elements are different in nature the purpose of
both both of them is to increase the lifespan of the business so now
according to the accounting standard the assets are recorded are something
basically that provides future benefit to the business and that's why business
consultants encourage businesses to build assets and reduce expenses on the
other hand the liabilities are something that you are obligated to pay off in the
near on the distant future so the liabilities are formed because you
receive service product now to pay off later so in this tutorial go through a
comparative analysis of asset vs liability and would look at different
aspect in length we'll start with the difference assets vs liabilities the
first and the foremost difference is then is the meaning assets provides the
future benefit to the business and liabilities are the obligations to the
business so whatever future benefit that you receive is its from the assets while
the liabilities are basically an obligation that you need to pay in for
the business in the future course so this at the top differences you can say
the first that is the meaning part let's move to the next depreciation assets are
depreciable but liabilities are not depreciable it is as simple as that you
know assets like you know land does not remember one thing land is not at all or
depreciable asset so this thing has to be taking care of
and there's one more thing that you know you know what we were supposed to talk
is building furniture all this sort of assets engines let's say of playing
so all this assets are depreciable assets so on this the depreciation will be
charged depreciation means let's say today the value is 100 and the
depreciation rate is the variant tear in the asset is 10% so 100 we will
reduce 10% so let's say this was the amount standing as on 2016 so this
will be amount that will be standing on 2017 again on this because you're
following a WTV method we'll be applying 10% on this and our among for
2018 is going to be 81 so this is how the depreciation is charged right so
this is only possible in case of asset but not in case of Liabilities
Liabilities are completely non depreciable right no increase in the account if an
asset increased asset is increase it would be what it would be debited and if
the liabilities increase it would be credited it is as simple as that
let's say if you buy our furniture right so the furniture account will be debited
account debited to cash right let's say you bought it for $2,000 now in case
you're paying of the liability let's say to 2 kg traders so kg traders has been
has been now paid off now instead of furniture the first case you know when
you bought the furniture instead of paying that cash you thought that you
know I'm not paying cash right now I'll pick now I'll pay the amount after one
month so it will be outstanding right - let's say kg traders from whom
you bought such furniture so it is outstanding so you you see the asset as
increase it is debited the liability is increase it is credited but when you pay
off when you pay off your creditors so your liabilities will be debited the kg
traders will be debited to your cash that you are paying through
so I hope you must have got the idea increase in the account if an asset has
increase it would be debited if the liability is increased it will be
credited now decrease in the account if the asset is decreased it would be
credited and if the liabilities is decrease it would be debited we just learned over
here we'll carry on with the example to understand this over here the asset
increased because we bought the asset and the liability increased we credited
so asset debited over here and liability credited this is in case of increase in
asset and liability okay this is in case of increase in asset and liability now
let's see a different scenario over here here the liability reduced so the
liability got reduced let me just oh you're right asset as increased
liability as increased liability it decrease assets decrease so over
here we are reversing your the liability has decreased and asset is also been decrease
so liability has been debited and asset has been credited right we are just
reversing the transaction that is what is here what is written here now the
types asset can be classified under many types tangible and intangible current
assets and fictitious assets let me define you the terms now there is a
thing called tangible assets tangible assets are those assets that you can
touch you know that you can see and touch like you know building land
machinery you have furniture all of these assets are something that you can
see and touch so that's why they are tangible there are some asset which are
intangible assets those assets are like you know your goodwill
then you have what we say copyright something that is not visible but still
it is an asset okay something that that that you cannot touch but still it is an
asset right goodwill in copyright patent trademark these are all sort of your
intangible assets and we had current as well as non current current assets are
those assets which can be realized into cash within less than 1 year of
timespan and non current assets are opposite of current assets as simple as
that liabilities can be classified under
current and long-term current means if it has to be realized in 1 year then
current if not then it is long-term now the cash flow part it generates cash
flow over the years absolutely and it flush out the cash outflow over the
years absolutely you know the assets are going to help you to increase your or
generate the cash flow over the years it is going to increase the cash from your
company and over here it is going to reduce it now the equation this is very
important except is equal to liabilities Plus shoulders equity your balance
sheet looks something like this this is your liability part and this is let's
say your asset part if this is 100 in total then this has to be 100 and
liability includes your current liability plus your shareholders equity
right so this has to be 50/50 and the net should be 100 so asset is equal
to liability plus shareholders equity and liabilities is going to be you just
need to rearrange the equation as simple that the format we present the
current assets first and then the non current assets over here we present the
current liability first and then the non current liabilities placement in the
balance sheets assets are placed first Liabilities are placed after the total
assets completely so let me conclude our are
different differences between assets and liabilities session assets an liabilities
are part of and parcel of the business without creating assets no business can
perpetuate at the same time now if the business doesn't take any liabilities
then it will not be able to create any leverage for itself so if the assets of
the business are properly utilized and liabilities are are taken only to
acquire more assets a business will thrive but that doesn't always happen
because of the uncontrollable factor the business faces and that's why along with
generating cash flow from the main business organization should also invest
in assets which can generate cash flow for them from various sources like for
an individual the secret to wealth is to create multiple streams of income and
organisation as well and multiple streams of income which are necessary so
as to fight the unprecedent events in near future thank you everyone for
joining the sessions Cheers
For more infomation >> What do you want to be when you grow up? - Duration: 2:22. 
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