What is the difference between assets and liabilities?
Liabilities are the capital of a company. However, this does not make it clear where exactly the difference lies. Liabilities are used to finance the value-added assets of the business. The asset side, on the other hand, reflects the valuable assets that the house can work with. Assets and liabilities must therefore have the identical amount in accounting – otherwise the accounting is wrong.
A business needs to purchase machinery for production. These are listed in the balance sheet as assets, since they are used for manufacturing. The amount that is used to finance the machines with credit appears in the liabilities. This money cannot be used in any other way because it is tied up. It is correspondingly passive. However, both sides have the same value.
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