Assets and Liabilities Spreadsheet Template – Assets, liabilities and equity are the components of the balance sheet. Then take a deeper look at these basic elements of accounting. Assets, liabilities and equity are the components of the balance sheet. Then take a deeper look at these basic elements of accounting.
Defines the three elements as follows:
In accounting, this is called the total resources available to the company to carry out its operations; Represent all property and rights that are the property of the business.
In accounting it is denominated thus all the debts and obligations contracted by the company, or position of the business.
Equity (Stockholders’ Equity)
This expression is used in accounting to refer to the sum of the contributions of the owners modified by the results of the operation of the company; It is social capital plus profits or less losses.
According to Pérez (2008, pp. 13-17), patrimony is the object of study of accounting, it is constituted by different types of elements called patrimonial elements, assets, rights and obligations, that are grouped in two sets of Patrimonial elements Or large patrimonial masses: Active and Passive.
Patrimonial elements that mean property and rights of collection of the company. There are two types of assets:
Current assets: items that are expected to be sold, consumed or realized during an economic period, such as the amount of cash in the box, bills pending collection, etc. It is divided into:
Available: metallic cash, such as money deposited in company boxes, bank accounts in your name, etc.
Realizable: goods capable of being converted into cash by means of a process different from the one that constitutes the object of the company. They could be shares of other companies and collection rights, such as bills for the sale of a product, commercial bills receivable, etc.
Stocks: elements or goods that, being the object-activity of the company, are needed to generate cash, such as finished products, warehouse goods, etc.
Non-current assets or fixed assets: elements that by their use remain in the company over several years, such as furniture, buildings, computers, machinery, tools, etc. It is subdivided into:
Material: elements such as premises, furniture, means of transport, computers, etc.
Intangible: elements such as computer applications, patents, etc.
Patrimonial elements that mean obligations or debts of the company. Within the liability can be differentiated:
Demandable liabilities: resources outside the company, or debts and obligations with the outside; Such as a loan granted by a bank. It’s divided in:
Current: short-term obligations of the company (up to one year).
Non-current: long-term company obligations (more than one year).
Liabilities not demandable or Equity: own resources of the company, or debts and internal obligations; Such as capital contributed by the owner and undistributed profits. It is subdivided into:
Capital: patrimony of the individual entrepreneur or contributions made to the company by the constituent partners (Capital or Capital Stock).
Reserves: profits of the company not distributed among its owners, which constitute an economic fund until its subsequent distribution.
Relationship between assets, liabilities and equity
Perez (p.18) explains the relationship between these elements
The Asset is what is possessed, that is, the assets possessed and the rights that will become things possessed in the future.
Liabilities and Net Assets represent how to finance what you want to own, through debts, loans, contributions from owners, etc.
Asset = Destination of financial means
Liabilities + Net Equity = Source of financial means
Liabilities + Shareholders’ Equity:
It is the financial structure of the company.
It is made up of the. The company, either its own: (Net Worth), as well as others: (Liabilities due).
It is the economic structure of the company.
It constitutes the use given to the financial resources of the company.
Active – liability relationship – equity
Source: Pérez, p.18
Balance of assets: The balance of a company is the result of comparing the economic structure (Asset) with the financial structure (Liabilities + Equity).
In this way, the value d is expressed numerically
In this way, the value of each of them is expressed numerically, with the Net Asset being the difference between the sum of all the positive elements or Assets and the sum of all the negative or Liabilities.
Accordingly, we can establish the following fundamental relationships between Assets and Liabilities:
Active = Passive
Assets = Liabilities + Equity
Net Equity = Assets – Liabilities