When compiling the balance sheet of the enterprise, all business records are usually attributed either to an asset or to a liability. If the sums in the total line are the same, it means that there are no errors in the calculations and it is possible to prepare reporting documents based on the resulting data.
"What is the fundamental difference between an asset and a liability?" - a question that does not leave in peace future economists, as well as those who plan to understand all the nuances of accounting and financial accounting. And the equal sign between the two balance graphs introduces some confusion. Indeed, why does this happen?
The structure of the balance includes several sections: 2 of them are written on the left side of it, the rest - on the right. The column "asset" reflects current (cash, inventory, accounts receivable, short-term investments) and non-current (fixed assets, intangible assets, long-term investments, construction in progress) funds of the organization. The property that is at the disposal of the enterprise is recorded here. It is possible to determine its belonging to assets by a number of signs:
- there is a possibility of disposing of funds;
- the property promises to receive benefits in the future period;
- the organization has the rights to use material assets.
The liability includes the means of forming property:
- capital and reserves;
- borrowed capital.
Equity capital belongs to the enterprise and affects the formation of some assets. And the funds attracted by the organization for conducting activities, depending on the period of use, are equated to short-term and long-term liabilities. They form a borrowed capital and must be returned in accordance with the contract.
Thus, the amount of the property of the enterprise is always equal to the sources of its formation. After all, if an organization received a loan from a bank, then the funds are directed to the acquisition of material values. As a result, the asset (the value of the acquired property) is equal to the liability (the amount of the bank loan). For values not provided for by the balance sheet, off-balance sheet accounting is applied.
