Accounting Assets and Liabilities Overview

Assets

• Classified into three main categories: Current Assets, Property, Plant and Equipment, and Intangible Assets.

Current Assets

• Comprise short-term resources that can be converted into cash within a year.
• Include:
  • Cash
  • Equity Investments
  • Notes Receivable
  • Income Taxes Receivable
  • Inventory
  • Prepaid Expenses

Property, Plant and Equipment

• Tangible fixed assets essential for business operations.
• Items include:
  • Land
  • Buildings
  • Equipment
• Depreciation is deducted from both buildings and equipment to reflect their reduced value over time.

Intangible Assets

• Non-physical assets contributing to a company's value.
• Main component:
  • Goodwill, representing the premium paid during acquisitions over the fair value of net identifiable assets.

Liabilities and Stockholders' Equity

• Divided into Current Liabilities, Long-term Liabilities, and Stockholders' Equity.

Current Liabilities

• Obligations due within one year categorized as:
  • Accounts Payable
  • Notes Payable
  • Payroll Taxes Payable
  • Income Taxes Payable
  • Rent Payable

Long-Term Liabilities

• Represent obligations extending beyond one year, including:
  • Notes Payable
  • Bonds Payable, with deductions for any discounts on bonds issued.
  • Rent Payable, if applicable beyond the current year.

Stockholders' Equity

• Reflects the owners' residual interest in the company after liabilities are subtracted.
• Components encompass:
  • Preferred Stock, offering dividends and priority over common stock holders.
  • Common Stock, representing ownership in the company.
  • Retained Earnings, accumulated profits not distributed as dividends.