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What makes the difference between ASSETS and LIABILITIES?

Many people tend to invest in liabilities with the understanding that they are accumulating the Assets, e.g. Building a domestic house for the family to live in. Is this an Asset or the Liability?

Question posted by michealmasinde (17 points) 4 months ago. Answers: 2

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A complete explanation can be found at http://en.wikipedia.org/wiki/Balance_sheet
When you subtract your liabilities from your assets you arrive at your net worth.

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Answer posted by Milton Zlotnick (1,110 points) 4 months ago

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The simple answer is : Assets are things that you "own" or have the rights to. Liabilities are things that you "owe"

House = Asset
Mortgage (bank loan) = Liability
Difference in value between House and Mortgage = Equity (or Deficit if the mortgage is more than the value of the home)

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Answer posted by leadingledgers (111 points) 3 months ago

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