Assets and Liabilities: The Key to Wealth Assets and Liabilities are two terms that I am sure you have heard before. They are usually associated with the balance sheet. On the balance sheet assets are what you own, and liabilities are what you owe to others. In determining your net worth or the net worth of your company, you would subtract the value of your liabilities from the value of your assets. The number that you come up with is […]
Asset and Liability Basics Knowledge about accounts can make life easier. If you want to invest in a new business or join your ancestral business, plan to take a loan, find a job in any marketing company, want to become a manager of a multinational company or have the responsibility to manage your assets and liabilities, knowing the basics of an account is mandatory. Accounting is divided into two categories – Accounting for Cash Basis Accrual Accounting Cash-Based Accounting deals […]
What Is an Asset? When people asked this question, they are confused between ‘possessions’ and ‘assets.’ Your home, vehicle, jewelry are not assets. A good definition of the term ‘asset’ is something that can generate income. This is how a financially intelligent and knowledgeable person defines an asset. It is nothing but a personal possession that has earning potential. That means income producing a property can only refer to as an asset. Income generating assets are valuable for your total […]
What is Net Asset Value? Net Asset Value (or NAV) used as the primary metric to judge the size of an investment portfolio. This is expressed in dollars (or in several other currencies) and represents cash that will recover if all portfolio holdings liquidated at the current market price. In the case of a stock portfolio if the portfolio holds a long and short position, the long position has a positive value and the short position has a negative value, […]
What is Asset Depreciation? Assets are whatever the business has shown on the balance sheet; this can include property, machinery, computers, and more liquid assets such as cash/investment and current debtors. Assets need to have value, and with many larger purchases such as factory machines or large computer systems, they have initial value when purchased, this will decrease in value over time. Instead of these large purchases included in a specific month in your PL, they are ‘written’ for their […]
What Makes an Asset? Rich people buy assets, and the poor and middle class buy stuff. We have all heard this before, but how do we know an asset when we see one? The first step is understanding the definition of an asset. I like Rich Dad’s definition of an asset. An asset puts money into your pocket, whereas a liability takes money out of your pocket. Many people consider their home an asset. This is true, but the confusion […]
Asset vs. Liability For most people, the idea of asset vs. liability is a blur. It often becomes more confusing when you go to your banker. When you go to the bank to get a loan, your banker asks you to list your assets as collateral to ensure you can pay back the money they are about to lend you. What is most commonly listed…. house, car, jewelry… This is the single most significant idea that makes the middle class […]
Assets and Liabilities If you want to become rich and be able to retire early, then the most important thing you learn is the difference between an asset and a liability. Wealthy people understand the difference and buy assets that make them more precious, the poor, and middle class do not understand the difference and thus make poor investment decisions that instead of making them more productive work to make them more miserable. People work all their lives in an […]
