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Types of assets and liabilities in the budget

budget

The budget is one of the most important accounting financial statements, as it contains a set of data, which expresses the costs and revenues that occurred in the facility during a specific period of time. And measuring the performance of the facility, and one of the most important data that is found in the budget is assets and liabilities. The article explains the types of assets and liabilities in the budget, which express the financial position of the facility during the budget period, which may be a year or six months.

The concept of assets and liabilities assets

Are those properties of high material value, which financial entities purchase with the aim of benefiting from them in their business and generating income and financial profits, and assets have a marketing value and the asset can be a physical thing such as land, buildings, machinery and inventory, or something immaterial or tangible such as copyright and patent and trademarks. Liabilities are the legal and financial obligations imposed on a person, institution, or financial entity, resulting from transactions or actions in a previous financial period, and also express accounts, wages owed, taxes, debts, and short and long-term loans. The assets of the company are placed on the left in the balance sheet. As for the liabilities, they are placed on the right, and then they are monitored according to the order of the types of assets and liabilities in the balance sheet.
Types of assets and liabilities in the budget
Types of assets and liabilities in the budget

Types of assets and liabilities in the budget

Financial statements in the budget are usually classified into several types and sections, so that the financial institution can easily and easily understand its financial position during the budget period, and also determine future plans based on their status. The following is an explanation of the most important types of assets and liabilities in the budget:

1- Types of assets in the budget

The types of assets in the balance sheet are divided into two prominent sections, through which the concept of assets can be clarified in more detail, and they are as follows:

Current assets or current assets

Current assets are an item in the budget that is listed under the item assets and their types and is characterized by ease of converting them into cash within one year, or at least during the period of the financial statements, and they are presented in the balance sheet in the order of their conversion to cash, as the liquid monetary items are placed first and then the least easy to follow In converting it into cash, the most important examples of this are cash including foreign currency, stock and inventory.

Non-current or non-current assets

It is the non-monetary asset, or it is not expected to be converted into cash or used during the budget period or within one year, and the increase in non-current assets reflects the lack of sufficient financial liquidity in the facility to help support its business investments using non-cash assets.

2-Types of liabilities in the budget

As for what is related to the types of liabilities in the budget, it is also divided into two main sections, namely, long-term and short-term liabilities, and they can be explained in detail as follows:

long-term liabilities

These are the liabilities owed by the facility for the period of its work, the payment of which is expected to be delayed for more than a year, and the most important examples of which are long-term loans.

short-term liabilities

They are the obligations or expenses payable, related to the work in the financial entity, and which are paid within one year or less, and the most important of which are taxes, salaries owed and short-term loans.
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