1. Assets – What You Own
Assets are resources with economic value that the business controls. These are classified into:
A. Current Assets (Short-Term)
- Cash & cash equivalent
- Accounts receivable
- Inventory
- Short-term investments
- Prepaid expenses
B. Non-Current Assets (Long-Term)
- Property, plant, and equipment (PPE)
- Long-term investments
- Intangible assets (trademarks, patents)
- Deferred tax assets
2. Liabilities – What You Owe
Liabilities represent financial obligations or debts.
A. Current Liabilities
- Accounts payable
- Short-term loans
- Accrued salaries and expense
- Taxes payable
B. Long-Term Liabilities
- Long-term loans
- Bonds payable
- Lease obligations
- Deferred tax liabilities
3. Equity – Net Worth of the Business
Equity is the value remaining for the owners after liabilities are subtracted from assets.
- Share capital (for companies)
- Retained earnings
- Owner’s capital (for proprietorships/partnerships)
- Reserves & surplus