ASSETS

What is Assets

Definition of assets-Several authors have defined assets in different ways.The following are some definition given by eminent authors.”An assets is any future service convertible into money the beneficiary interest which is legally or equitable secured to some person or set of person,such a service is an assets only to that person or set of persons to who it runs.” “Assets is business enterprise.” “Assets are economic resources devoted to business purposes within a specify accounting entity.” “Assets represent expected future economic benefits,rights to which have been acquired by the enterprise as a as a result of some current or past transaction.”Nature of assets:
From the above definitions and nature of assets following characteristics emerge out:

1. There must be service potential in future.
2. The firm must have right over such service potential.
3. The right must,be positive.Because negative right does not generate service rather causes further expenses in future.
4. Such right must vest or accrue to any specific individual or firm,(v) Such rights must be measured and expressed in term of money.

HOW DO YOU DISTINGUISH BETWEEN FIXED ASSETS AND CURRENT ASSETS ?

FIXED ASSETS CURRENT ASSETS

a) Fixed assets are purchase                            a) Currents Assets are purchased with  a view to 

c) Depreciation is charged on                            c) Current assets is not subject to fixed assets.  

    to Depreciation 

 
d) Fixed assets do not changed) Current assets changes from Frequently.

    from frequently.

LIABILITY

What is Liability

Liability refers to the sum of money for which one is legally responsible for payment to another person or a firm. The following conditions must be satisfied recognizing an item or liability

1. Liability must be certain: There must be certainly in accepting liability.If there is a “chance” or probability in a occurrence of liability in a future period,such item is not regarded as liability in accounting.
2. Known amount:The extent of liability,must be known in monetary terms because in order to record the event of liability numerical figures is required.Liability for some money,huge numerical figures,are acquired.Liability for some money”huge amount “etc,are not recognised in accounting.
3. Past or present transaction: General liability arises from past or present transactions,taken goods purchased service/value from a person firm give rise of liabilities.
4. Promise: Liability may arise in future from promise made at present.Such as charity,donation,proposed dividend promised to be paid in future.
5. Identify of creditors: In order to treat in item as liability the creditors must be identifiable.If is trace of creditors or claimants,liability would cease virtually.