Finanical Accounting Concepts Phase 1 DB Essay Example | Topics and Well Written Essays - 500 words

Finanical Accounting Concepts Phase 1 DB - Essay Example whereas, intangible assets include patents, goodwill etc. Whether assets are tangible or intangible, they always equal to the liabilities and the owner’s equity. There also exists long term and short term assets. The long term assets are of maturity which is more than a year and the short term assets are those which are categorized in having less than a year maturity. Liabilities are what an organization owes and are an obligation to the company. Liabilities are, in fact, claims by the creditors on the assets possessed by any business. All the payables (accounts payable, notes payable etc), loans, mortgages, salaries and the like that the company owns are included in the liabilities. Liabilities are also called debts. Liabilities include short term and long term liabilities. The long term liabilities are those which are to be paid after a year and the short term liabilities are those which are to be paid within a year. The amount invested by the investors or the owner’s contributions in the organization is known as the owner’s equity. This is the owner’s rights to the assets of the company. In other words, it is the amount of assets invested by the owner into the business. The owner’s equity includes the capital, drawings, common stock, preferred stock, treasury stock, additional paid-in capital and retained earnings