Ask anyone in your circle about the assets he has, and invariably the answers would include home and car. But, is your car and asset for you? Or for that matter, your home, which you have bought after taking a loan from difference between investment and loan bank? Most people remains confused and cannot answer this question.
Understanding the difference between assets and liabilities is necessary to have a better understanding of what to do with money in your hands. An asset is something that generates income for the owner on a regular basis. In a more traditional way of thinking, an asset is anything that can be turned into money when you so desire. If you have gold as your savings or in the form of jewelry of your wife, it can be considered an asset. Liabilities are just the opposite of assets and this is reflected in the manner they are shown in a financial statement.
While assets are placed in the left side of a balance sheet, liabilities always find a place in the right side of the balance sheet. All assets and liabilities get recorded in financial statements to enable a reader to know the financial condition and performance of a business or a company. Assets are all those things a company owns such as cash, plant and machinery, raw material for products. These are recorded in terms of their dollar value in a balance sheet. There are current assets such as cash, raw materials and inventory, investments like stocks and securities in which a company invests, and capital assets like land, buildings, plant and machinery. There are intangible assets also like patents and trademarks.
There are both current as well as long term liabilities. Employee salaries, electricity bills, money owed to suppliers and short term loans to be rapid within a year are called current liabilities. On the other hand, all liabilities that can be carried over to next financial year are labeled as long term liabilities. What is the difference between Liability and Asset? An asset is anything that puts money in your pocket on a regular basis or generates income.
Liability is anything that causes outflow of money from your pocket. Thus, a home purchased through loan from bank and your car is examples of liabilities, whereas savings invested in profitable schemes earning income for you are assets. Help us to improve our writing. Protected by Copyscape Plagiarism Checker – Do not copy content from this page. Many people do not understand the principles of, and the differences between, NGO and Non-profit organizations, even though they are well-known terms in the 21st century.
First of all, to clarify, NGO stands for a non-governmental organization, and a non-profit organization can also be referred to as a NPO. Non-governmental organizations are created by legal persons who are not part of the government. Although NGO funds are mostly raised by the government, they maintain a non-governmental position, and eliminate the need for a government council. This type of organization is also known as a civil society organization.
In 1945, after the establishment of the United Nations Organization, the non-governmental organizations became extremely popular. Although, before this time, there were other organizations, such as the famous Rotary International, that began its operation in 1904. By the end of the year 1914, there were one thousand and eighty three NGOs in existence. On the other hand, the non-profit organization does not divide its extra funds between its shareholders, or owners, but uses them for the organization’s purposes. Examples of these organizations are public arts organizations, trade unions and charitable organizations. The NGO is a non-governmental organization.