EDUCATION 101: ASSETS AND LIABILITIES.

Assets and Liabilities.

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ASSETS
An Asset is anything of value owned by a business. They may be classified as
Fixed assets
Current Assets
Assets Neither Fixed nor current.
FIXED ASSETS
These are those which are retained for use in the business for along period of time such as premises, buildings, plants machinery, motorvehicles, furniture and fittings.
CURRENT ASSETS.
They are short term assets either in form of cash or are convertible to cashin a short period such as debtors, stock, cash in hand and cash at bank.
ASSETS NEITHER FIXED NOR CURRENT.


They are assets shown in between fixed and current assets in the balance sheet. They can be classified into:
Investments
Intangible Assets.
Investments: They are made by a business enterprise in some cases in form of purchase of shares or debentures of a limited company which may be quoted or unquoted.
Intangible Assets: Are assets which have no material existence such as goodwill, patent rights and copyrights.
*Goodwill: The value arrived at as a result of appreciation of business or property in value with time.
*Patent Right: Original rights of owner/Investor such as technology
*Copyright: Rights of direct owner of property such as Books, Music
If along established business is purchased by a person then they are supposed to pay something for the reputation of that business.
LIABILITIES
Liabilities means financial obligation of a business and may be classified as or rather into:
Long term liabilities.
Current Liabilities.
LONG TERM LIABILITIES
These are liabilities payable at a date more than a year from the balance sheet date.
It Consists of capital and Long term loans.
*Capital is introduced by the owners and is intended to remain in the business as long as it continues to exist or rather as long as the business is a going concern.
*Long term loans constitute external borrowing of a firm whose repayment period is more than a year.
CURRENT LIABILITIES
These are payable by the business within one year of the balance sheet date such as creditors, banks Overdrafts (O.D) outstanding Expenses and Taxation Payable.

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