What is the difference between a company's assets and liabilities?
Verified 30 September 2025 - Directorate of Legal and Administrative Information (Prime Minister)
Assets and liabilities are the two parts of a company's assets. They give an indication of the value of the company and appear as a table of 2 columns in the balance sheet of the company. The asset (what the company owns) corresponds to the throughput and the liability (what the company owes) is credit.
What is a company's asset?
THEactive of the company corresponds to the whole of the heritage possessed by the company, whether it is hardware (buildings, equipment, etc.) or intangible (claims, patents filed, etc.). It is therefore an identifiable asset with a positive financial value for the company. These elements have already enabled the company to create value, are still creating value today, and will continue to do so in the years to come.
Please note
The asset is located on the left part the balance sheet.
Among all the assets, it is necessary to distinguish the fixed asset (goodwill, equipment in particular) and the current asset (e.g. inventory, personnel, trade receivables, bank balance):
THEfixed asset includes all goods that have a long-term utility the activity of the company. We are talking aboutfixed assets. There are also 3 categories of fixed assets:
Category of fixed assets | Definition |
|---|---|
Property, plant and equipment | Physical assets used on more than one accounting year (buildings, furniture, machinery, etc.) |
Intangible assets | Non-physical and non-financial assets (patents filed, goodwill, software, etc.) |
Financial fixed assets | Sustainable financial assets (equity in businesses, sureties, loans, etc.) |
THEcirculating asset includes all goods, which, on the contrary, do not have a lasting usefulness to the activity of the company. So it's the short-term mobilizable assets by the company. There are 6 categories:
Categories of movable property | Definition |
|---|---|
Inventories and WIP | Goods and work in progress, for example |
Advances and installments paid on order | Amounts paid by customers of the company before the performance of the service or the delivery of the goods |
Receivables | Claims held by the company against third party |
Investment securities | Acquired securities (shares or shares) intended to be resold quickly |
Availability | Available on bank accounts and company coffers |
Prepaid expenses | Purchases of goods or services, the supply or provision of which will take place later |
What is a company's liability?
The passive corresponds to the company's means of financing its assets. It therefore has a negative financial value for the company.
Please note
Liabilities are on the right part the balance sheet.
The liability is composed of internal liability and the external liability.
Internal liabilities correspond to equity. It consists of 4 categories:
Categories of equity | Definition |
|---|---|
Permanent capital | Capital contribution (in kind or cash) of the company's partners |
Legal and statutory reservations | Profits not allocated to partners and made available to the business |
Postponement again | Benefits of theexercise precedent not distributed and not placed in reserve |
Profit for the year | Net income after tax that shareholders will be able to share (in the absence of past losses) or leave in reserve in the company |
The external liability is composed of 2 categories:
Categories of external liabilities | Definition |
|---|---|
Debts | Debts whose amount and maturity are known (tax and social security debts, loans, etc.) |
Provisions for risks and expenses | Liabilities whose amount or maturity is not yet known |
FYI
In a balance sheet, the asset must always be equal to liabilities. When the cash on the liability exceeds the cash on the asset, the company is cessation of payments.