[envyii109]

STUCK ON THIS! Please help its driving me crazy!

[Camborio]

Read, Rich Dad, Poor Dad, by Robert Kiwasaki (I think that is how it is spelled). Basically an Asset is something you own that stays or increases in value, a liability is something you own that decreases in value. Off the top of my head I can't really think of anything that would be a liability and an asset.

[ashley568]

STUCK ON THIS! please help its driving me crazy!

No its not possible... asset is anything of value owned by the company (cash, prepaids, inventory... ) and have a normal debit balance. Liabilities are when a company owes money (accounts payable unearned rev) and they have a cedit balance.

In case anyone is wondering have taken upawards of 7 accounting classes and am working on a bachelors...

[AdamUTsel]

Keep in mind regarding Assets and Liabilities (per the Conceptual Framework)...

Assets have Four essential characteristics:

The probable future benefit involves a capacity, singly or in combination with other assets, in the case of profit oriented enterprises, to contribute directly or indirectly to future net cash flows, and, in the case of not-for-profit organizations, to provide services;

The entity can control access to the benefit;

And, The transaction or event giving rise to the entity's right to, or control of, the benefit has already occurred.

These are not meant for resale.

It is not necessary, in the financial accounting sense of the term, for control of assets to the benefit to be legally enforceable for a resource to be an asset, provided the entity can control its use by other means.

In financial accounting, a liability is defined as an obligation of an entity arising from past transactions or events, the settlement of which may result in the transfer or use of assets, provision of services or other yielding of economic benefits in the future. Individual or group must adopt corporate charter and file it with the state.

They embody a duty or responsibility to others that entails settlement by future transfer or use of assets, provision of services or other yielding of economic benefits, at a specified or determinable date, on occurrence of a specified event, or on demand;

The duty or responsibility obligates the entity leaving it little or no discretion to avoid it;

And, the transaction or event obligating the entity has already occurred.

[Superfly999]

Assets CAN have a credit balance such as a contra asset account. However, do to its purpose it is considered an asset account. Also, keep in mind what Adam said; each account type has a purpose its pretty much as simple as that. Finding out what type of account it falls under is the more difficult of the 2, but that's pretty simple most of the time as well :P.

[wingrun]

How would you describe a 1 year subscription to a newspaper (prepaid subscription)? Can you think of it as a asset that is a liability?

[AdamUTsel]

If you prepay for something, it is an asset. The value of the prepaid is reduced as you incur (receive) the subscriptions.