Difference between Assets and Liabilities | Welcome to Linda Ikeji's Blog

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Friday, 10 April 2015

Difference between Assets and Liabilities

An asset is anything, which you own and which is valuable, whether it is tangible or intangible. Assets are said to have positive economic value. Simply put an asset is something that is worth money and which a person can exchange for money.

Examples of tangible assets, that is assets we can see and touch, are cash, goods or inventory, land, buildings and equipment. Examples of intangible assets, that is, assets which we cannot see or touch, are trademarks, copyright, patents, goodwill and stock.
A liability on the other hand is an obligation – for example money that must be paid or services that must be performed. A liability is the result of a past transaction or event. Settlement of a liability usually involves the handing over of an asset. Examples of liabilities include salaries payable, accounts payable, as well as long or short-term loans which individuals or companies take and which they, of course, have to pay back.

To put it simply, an asset is something that you OWN while a liability is something that you OWE.

A financially successful person or company has more assets than liabilities. This means that they have the means to fulfill or settle their obligations. On the other hand, a person or company whose liabilities are more than their assets is probably in trouble.

In managing your finances therefore, you must ensure that your liabilities do not exceed your assets.
This has been courtesy EcoBank as part of The Bankers Committee Financial Literacy Public Enlightenment Programme brought to you by The Bankers Committee, comprising all the commercial Banks in Nigeria and the Central Bank of Nigeria, CBN.

59 comments:

NaijaDeltaBabe said...

Nice lecture. I felt like an online student while reading dis. Lol

optimisticlady said...

Edutainment reloaded...on LIB!

Unknown said...

Great sermon. webdona.blogspot.com

Anonymous said...

AND MOST TYMS PPLE GO ABOUT ACQUIRIN LIABILITIES AND VRY FEW OR NO ASSETS....TOMJERRYSWIT

Luck Adolphus... said...

Thats Good!!!
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Unknown said...

a.k.a EDWIN CHINEDU AZUBUKO said...
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This blog don turn economic class neh.... But niceone though.....
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***CURRENTLY IN JUPITER***

Anonymous said...

Linda the project you promised to roll out to young ladies, have you put that in the back burner? Talk that talk and toss the a/l accounts. You don become accounts lecturer or what?

Unknown said...

Ok. Noted.

Anonymous said...

In real life liabilities are people who drain energy off you. Assets are people who add value to your life. Just saying.

Unknown said...

Ecobank thanks for the lecture.

Unknown said...

Oh! Nice one, and thanks for dis. Thumbs up to them, and more power to their elbows.

Alloy Chikezie said...

Are this guys for real? Are they trying to lecture a school boy or what? What a waste of my time reading this.

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Anonymous said...

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No blabla scammer or time waster know what you want please

Unknown said...

Seen.
Thanks for the lecture.

Unknown said...

Okiie seen, thanks for keeping us informed. Linda take note!

Unknown said...

Okiie seen, thanks for keeping us informed. Linda take note!

Unknown said...

Correct, dat reminds me of financial accounting years back at school. Its well

Unknown said...

Okiie seen, thanks for keeping us informed. Linda take note!

Unknown said...

Heard

Unknown said...

Thanks for info.....

Anonymous said...

Nice post....keep it up.....#educative#

Anonymous said...

Thank you Ecobank

Anonymous said...

for a min I tot Linda was giving us free financial lesson until I got to the end. No one is that nice these days.

Unknown said...

Good explanations. Simply put, an asset is something of value that adds money to ur pocket while a liability is something that takes away money from your pocket. Your asset gives u your income, your liability incurs your debt

Unknown said...

Ok Linda... Thanks for d lecture

Unknown said...

Tanx for enlightening us madam lindinwe

Unknown said...

Nice one linda...according to Assets are resources own and control by an organisation as a result of past event, upon which future economic benefits are expected to flow (in), while liabilities are obligations incurred as a result of past event, upon which economic benefits are expected to flow (out). For you to say it's an asset, you must own it and control it. #winks

Anonymous said...

thank you....

Dr. Chinedu said...

lol, u don turn banker?

Unknown said...

Hmmmm very educative, atleast I just learnt something frm this. God bless the bankers committee

Unknown said...

Well said! But who is a "BABY MAMA? ASSET or LIABILITY?

Unknown said...

Well said! But who is a "BABY MAMA? ASSET or LIABILITY?

Unknown said...

Well said! But who is a "BABY MAMA? ASSET or LIABILITY?

Anonymous said...

This is the problem with most people.
Asset is the item that brings money into your hands while liability is the item that takes money out of you hands at the present moment

Unknown said...

Noted

Funlad said...

Correct linds

OLAYINKA MICHAEL said...

GOOD ONE FROM LINDA BUT DEFINITION AND EXPLANATION IS NOT TOO TAP.

Unknown said...

D comparism makes a lot of sense. Nice one.

Anonymous said...

I think this is very wrong...if assets can be more than liabilities, then why does the balance sheet - which comprises of assets and liabilities - always balance. in truth assets will always equal liabilities. What differs is their source. E.G. I borrow 100 naira to do business. The borrowed money is a liability, but also an asset as it is my source of capital.

Unknown said...

Linda has gone educational!!
Nice One

@UmehOma

Sahelpost.Com said...

Nice Lecture!
Really informative.

Anonymous said...

Liabilities could also be used to increase assets. If you borrow money and use it to invest and make more money, the liability has increased your asset.

Anonymous said...

This is pretty wrong.
some things cost money, but are liabilities. Cos they depreciate.

Onomiroro Dono Okeh said...

Liabilities is poverty mind condition and Asset is wealth mind condition.
Kindly click
Snap Out of it - The Poverty Mind Condition

Anonymous said...

I don't know where you went to school or if you used bottom or gifts and wine to pass your exams. The balance sheet always balance because of owner's equity.

Innocentia Annie said...

Nice one
Lesson learnt

Unknown said...

Nice 1..

Unknown said...

Tnk u for dis info..

Anonymous said...

the picture dat came with dis post is wrong... liabilities weigh someone down while an asset does the Opposite. so I tink assets should be up nd Liabilities "down"

Flavia said...

The must own OR control the asset. Not own and control...

Unknown said...

Nice lecture, always have to make sure liabilities don't overwhelm us.

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Unknown said...

To me asset is something you have or own that's has value Y at time x. That still has value at least Y at time x+1, when inflation and in rare case deflation, is taken into consideration, if services are involved, it should have value of Y+services. That rules out cars, depreciable assets. Stocks can in some cases.

FUTURE LEADER said...

EXCELLENT POST LINDA, EVEN THOUGH SPONSORED IT'S THE BEST EVER...THIS IS EXACTLY WHAT A POWERFUL BLOG LIKE YOURS SHOULD BE DOING

EMPOWERING NIGERIANS AND TEACHING THEM HOW TO CONTROL THEIR DESTINY EN-MASSE

WELL DONE. PAT ON THE BACK

Anonymous said...

Next time anyone asks you about your ASSets, it has nothing to do with the first 3 letters. Observe

Anonymous said...

In a simple form...... Asset put money into ur pocket while liability takes money out of ur pocket...

Unknown said...

Nice one bt I have a better explanation to that. Working class wife n a full time house wife

Unknown said...

Assets is heavier or ideally should be. Thats why its down cos ut weighs more

Unknown said...

*it

Unknown said...

Hv learnt, thank u

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