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  • Writer's picturePatrick Aloisio

What are Assets vs Liabilities?

Updated: Jul 18, 2022


assets vs liabilities

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An asset is something that currently has a positive economic value, or has the expectation that it will have benefit in the future. So what might this include?

  • Cash

  • Gold

  • Stocks

  • Bonds

  • Land

  • Bitcoin

  • Accounts Receivable

  • Intellectual Property (Copyrights, Patents, etc.)

Assets can be owned by an individual, a company, or a country.


Without going into too much nuance, assets can be categorized further into Current Assets vs Fixed or Long-Term Assets. But this breakdown really only matters for accounting purposes.


You can make the argument between which Asset you would prefer to own over another, but Assets are all something you would want to own vs not.

assets vs liabilities

Now what is the opposite of an Asset? Liabilities.


Liabilities mean something that you have an obligation to pay.


Liabilities include:

  • Loans

  • Mortgages

  • Accounts Payable

  • Utilities

  • Taxes

  • Any type of debt

Basically think of these as expenses. Liabilities can also be broken down further into Current Liabilities vs Long-Term Liabilities. But again, this only matters in formal accounting situations.


The line between an Asset vs Liability is pretty easy to see. The best rule of thumb for financial well-being is to make sure your Assets > than Liabilities.


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assets vs liabilities
 

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