Long Term Liabilities

The debts or liabilities which are payable after a long period of time normally more than one year are called long term liabilities.

Long-term liabilities area unit liabilities with a future profit over one year, like notes owed that mature longer than one year.

In accounting, the long-term liabilities are shown on the proper wing of the balance-sheet representing the sources of funds, that area unit generally bounded in form of capital assets.

Current Liabilities

The debts or liabilities which are payable within one year are called current liabilities. For example: Creditors, Account Payable, outstanding wages, and outstanding expense

In accounting, current liabilities are typically understood as all liabilities of the business that square measure to be settled in cash inside the fiscal year or the operating cycle of a given firm, whichever period is longer. A a lot of complete definition is that current liabilities are obligations that may be settled by current assets or by the creation of latest current liabilities. Accounts payable square measure due inside thirty days, and square measure paid inside thirty days, but do typically run past 30 days or 60 days in some situations. The laws relating to late payment and claims for unpaid accounts payable is said to the issue of accounts payable. 

The types of current liabilities embody notes collectible, long debts collectible, increased expenses and accounts collectible. at intervals these classes square measure particular types of liabilities, like debts to staff and suppliers, bank loans, prepayments and taxes. a couple of examples might build current liabilities easier to know.

Outstanding Assets

Income earned but not received and expenses paid in advance are called outstanding assets. For Example: Account Receivable, Prepaid insurance,

Contingent Assets

Assets which come into existence upon happening or not happening of certain event are called contingent assets.

A contingent asset could be a potential asset related to a contingent gain. in contrast to contingent liabilities and contingent losses, contingent assets and contingent gains aren't recorded in accounts, even after they are probable and therefore the amount may be estimated.

Fictitious Assets

Assets which cannot be used and have no market value are called fictitious assets. For example: Preliminary expenses, Discount on issue of shares.

Wasting Assets

Assets whose value gradually decreases due to use are called wasting assets. For example: Mines, Forests

Assets have a helpful life, typically based on the period of your time that they need productive capability. because the plus is employed, it depreciates, eventually having very little or no residual price. throughout the amount of depreciation, the plus is named a "wasting plus." for instance, natural resources, like gas and timber, are wasting assets that eventually square measure used so don't have any remaining price.

Liquid Assets

Assets which are quickly converted into cash are called liquid assets. All current assets are liquid assets except inventory and prepaid expenses. Liquid Assets = Current Assets – inventory – Prepaid Expenses

An asset that can be converted into money quickly and with minimal impact to the price received. assets are usually regarded in the same light as money because their costs area unit relatively stable when they area unit sold  on the open market.


For an quality to be liquid it needs an established market with enough participants to soak up the selling without materially impacting the value of the asset. There also has to be a relative ease within the transfer of possession and also the movement of the asset. liquid assets embody most stocks, money market instruments and government bonds. The exchange market is deemed to be the foremost liquid market within the world because trillions of dollars exchange hands daily, making it not possible for any one individual to influence the rate of exchange.