what is the difference between assets, liabilities and capital

Assets are the resources(property, legal rights) owned by business and can be expressed in monetary value. Assets can be tangible or intangible nature. Its example are Building, Land, Furniture, Cash or Debtors. On the other hand Liabilities is the amount that business has to pay to Outsiders and to Owner. When amount is payable to Outsiders it will be called as External Liability such as Bank Loan and when it is payable to Owner it is called as Internal Liability such as Capital by Proprietor.

Capital is amount invested by the Owner in the business.

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Assets: The economic resources which are owned by the organisation are called assets.They are of teo types -Non current assets and current assets.

Non current assets are assets which are required for long term use.

eg:Furniture,land,building etc.

The assets which can be quickly converted into cash are called current assets.

eg:Debtors,cash,bills recievable etc

Liabilities:  They are the obligations payable by the organisation in the future.Liabilities are of two types- Non current liability and current liability.

Non current liabilities are long term liabilities which are payable after a period of one year.

eg: bank loan,loans from financial institutions etc.

The liabilities which are payable within a period of one year are called current liabilities.

eg:creditors,bills payable,etc.

Capital: the amount invested by the owner in the business is called as capital.Capital is a liability to the firm.

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