What’s the difference between assets and liabilities? Assets are resources, mach

Question

What’s the difference between assets and liabilities?

Assets are resources, machineries, patents, cash etc that a company own which generates revenues for the company. Assests can be appreciating assets (equity, land etc) or depreciating assets (machinery, furniture etc).

Liabilities are the obligations of payments that are owed to others. They are accounts payables, interest accrued, mortgage EMIs etc.

Which of the key financial statements features these categories prominently?

Key financial statements are

And assets and liabilities appear in Balance sheet. A quick view of all 4 is as follows

http://highered.mheducation.com/sites/0073324833/student_view0/ebook/chapter1/chbody1/the_four_basic_financial_statements__an_overview.html

Identify the six steps in the accounting cycle.

https://www.sapling.com/8762332/six-steps-accounting-process

What are the key reasons that firms do ratio analysis?

Ratio analysis is the practice of creating and comparing various financial ratios such as current ratio, inventory turnover ratio, average collection period, days sales outstanding, Profit margin, Asset turnover ratio etc between different firms so that we camn benchmark our performance with our competitors in the same industry.

It helps business to understand OBJECTIVELY what is our strength and what areas need improvement.

Explanation / Answer

1. What’s the difference between assets and lia-
bilities? Which of the key financial statements
features these categories prominently?
2 Identify the six steps in the accounting cycle.
3. What are the key reasons that firms do ratio
analysis?

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