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Accounting Terms. After completing this tutorial… You will be able to distinguish between an asset and a liability . You will recognize that it’s beneficial to have more assets than liabilities. Asset. Click on the pictures below to see the value of the asset. Moving on….

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accounting terms

Accounting Terms

After completing this tutorial…

You will be able to distinguish between an asset and a liability.

You will recognize that it’s beneficial to have more assets than liabilities

asset
Asset

Click on the pictures below to see the value of the asset

Moving on…

asset new computer
Asset- New Computer

New computer worth $1700.00

asset cash in bank
Asset- Cash in Bank

Checking account balance $525.00

asset business car
Asset- Business Car

Business car worth $20,000.00

asset building
Asset- Building

Building you purchased for $250,000.00

asset office supplies
Asset- Office Supplies

Office supplies purchased for $75.00

asset accounts receivable
Asset – Accounts Receivable

I will receive the money later

  • When a person owesYOU money, this is also an asset.
  • The asset is called “Accounts Receivable”.
asset prepaid insurance
Asset – Prepaid Insurance

I’ve paid my 6 month insurance premium

  • When you pay insurance premiums covering your property, this is also an asset.
  • Making payments in advance is called a “prepaid asset”.
definition of an
Definition of an

Asset

  • An asset is anything of value that is owned
  • An asset may be something which is paid for in advance, like prepaid insurance or prepaid rent.
  • Money you will receive later – Accounts Receivable
check and review
Check and Review

Which account is NOT an asset.

  • Desk
  • Prepaid insurance
  • Money you owe another person
  • Money that another person owes you
prepaid insurance
Prepaid Insurance

Try again… Remember, prepaid insurance is an asset because it has value.

slide13
Desk

Try again, a desk is an asset because it has value.

money you owe another person
Money you owe another person
  • Great job! Money $ you owe another person would not be of value to you because you will eventually have to pay the person off.
  • Money you owe is a LIABILITY

Moving onto Liabilities …

money that another person owes you
Money that another person owes you

Let’s think about this…

money that another person owes you1
Money that another person owes you
  • If a person owes you money, this is a good thing because you eventually will receive the money & this has value.
  • The question was which account is NOT an asset.
liability
Liability

I will pay you later

A liability is when you owe another person or business money.

liability1
Liability
  • A liability is when you owe another person or business money.
  • Liabilities typically include the word “payable” in the description.
examples of liability accounts
Examples of Liability Accounts
  • Accounts Payable
  • Notes Payable
  • Federal Income Tax Payable
  • Social Security TaxPayable
check and review1
Check and Review

So what’s the key word for a liability?

Payable

Receivable

let s think
Let’s think…

Receivable means that you will “receive” money at a later date.

Let’s try again

liability review accounts payable
Liability Review Accounts Payable

Great job,

The key word for liability is payable

check and review asset
Check and Review - Asset

Select the asset below

Money I owe

a business

Money that someone

owes me

asset review accounts receivable
Asset Review – Accounts Receivable

Great job,

An asset is something of value.

since someone owes you money it’s a good thing. It’s worth something!!!

review accounts payable
Review – Accounts Payable

Let’s think about this…

review accounts payable1
Review – Accounts Payable

Remember, if you owe another person money it’s not really a good thing. When you owe another person, you have a Liability.

Try Again

larger asset larger debt
Larger asset/larger debt

Great job,

Since the building is a larger asset which costs more than a car, you would incur a higher debt.

smaller asset smaller debt
Smaller asset/smaller debt

Try Again,

Since the car probably costs less than the building, you would not need to borrow as much money from the bank.

check and review2
Check and Review

Which would you prefer?

Accounts Payable

Accounts Receivable

review accounts payable2
Review – Accounts Payable

Let’s think about this…

review accounts payable3
Review – Accounts Payable

Remember, if you owe another person money it’s not really a good thing. When you owe another person, you have a Liability.

Try Again

accounts receivable
Accounts Receivable

Give yourself a high 5!!!

You’ve mastered the concept of distinguishing between accounts receivable (an asset) from accounts payable (a liability).

Finished – return to home page

Verify that you have mastered the 2 objectives of this lesson. Submit a one-minute paper answering the questions & mention how you liked this lesson.

review accounts payable4
Review – Accounts Payable

Remember, if you owe another person money it’s not really a good thing. When you owe another person, you have a Liability.

Try Again

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