--- title: "Asset & Liability Management: What You Need to Know" description: Understanding Assets and Liabilities is key to ensuring your financial documents report an accurate account of your company. Learn more in this article. image: https://www.baldwincpas.com/hubfs/shutterstock_1077543587.jpg --- 1 min read # Asset & Liability Management: What You Need to Know [ Baldwin CPAs ](https://www.baldwincpas.com/insights/author/baldwin-cpas) 9/14/22 9:48 AM [Elevate](https://www.baldwincpas.com/insights/tag/elevate) ![Asset & Liability Management: What You Need to Know](https://www.baldwincpas.com/hubfs/shutterstock_1077543587.jpg) **Understanding Assets and Liabilities ** Assets and liabilities are two of the three main components of a company’s balance sheet. Assets are everything the business owns and can be tangible or intangible. Everything from cash, accounts receivable, buildings, land, vehicles, and investments can be assets for a company. Liabilities consist of everything a business owes to others. Loans, credit lines and accounts payable are considered liabilities for a company. The difference between assets and liabilities makes up the third main component of the balance sheet, which is equity, or a company’s net worth. **Accounting Equation ** Total Assets = Total Liabilities + Equity **Importance Of a Correctly Coded General Ledger** It is important when entering transactions into your general ledger to properly code them to correct the accounts. For example, if a truck is purchased, it should be coded to the proper fixed assets account. If a thirty-year mortgage loan is taken, it should be coded to a long-term liabilities account. An asset purchase should never be posted to a liability account, nor a liability taken be posted to an asset account. If posted incorrectly, it can lead to inaccurate reporting and cause issues when trying to assess a company’s performance. Accurate reporting is crucial to the success of a company, allowing them to truly see where they stand and where they can improve. So, make sure to code correctly! Reach out to one of our staff members with any questions regarding assets, liabilities, or transaction coding, we would be glad to help! This article was written by Matthew Ashby, Accounting Specialist II with Baldwin CPAs. For questions or more information, please reach out to [matthew.ashby@baldwincpas.com](mailto:matthew.ashby@baldwincpas.com)[mailto:michaela.caudill@baldwincpas.com](mailto:michaela.caudill@baldwincpas.com).  ![Matthew Ashby](https://www.baldwincpas.com/hs-fs/hubfs/Team%20Photos%20for%20Website/Matthew%20Ashby.jpg?width=105&name=Matthew%20Ashby.jpg) - [Tweet](https://twitter.com/share) [![Leveraging Numbers to Create Your Business Strategy](https://www.baldwincpas.com/hubfs/Business%20Financials.jpg) ](https://www.baldwincpas.com/insights/leveraging-numbers-to-create-your-business-strategy) #### [Leveraging Numbers to Create Your Business Strategy](https://www.baldwincpas.com/insights/leveraging-numbers-to-create-your-business-strategy) [Baldwin CPAs](https://www.baldwincpas.com/insights/author/baldwin-cpas) : 9/26/23 6:35 PM Having a solid and effective business strategy can be vital to a company’s success, including obtaining and sustaining a competitive advantage with... [Elevate](https://www.baldwincpas.com/insights/tag/elevate) [Read More](https://www.baldwincpas.com/insights/leveraging-numbers-to-create-your-business-strategy) [![A Closer Look at the New QuickBooks Bank Feed and Accounting Agent](https://www.baldwincpas.com/hubfs/Deeper%20Look%20into%20New%20QBO%20Changes.jpg) ](https://www.baldwincpas.com/insights/a-closer-look-at-the-new-quickbooks-bank-feed-and-accounting-agent) #### [A Closer Look at the New QuickBooks Bank Feed and Accounting Agent](https://www.baldwincpas.com/insights/a-closer-look-at-the-new-quickbooks-bank-feed-and-accounting-agent) [Baldwin CPAs](https://www.baldwincpas.com/insights/author/baldwin-cpas) : 8/19/25 7:15 AM Helping You Work Smarter, Not Harder [Elevate](https://www.baldwincpas.com/insights/tag/elevate) [Read More](https://www.baldwincpas.com/insights/a-closer-look-at-the-new-quickbooks-bank-feed-and-accounting-agent) [![The Importance of Filing Quarterly Payroll Tax Returns](https://www.baldwincpas.com/hubfs/Payroll%20Taxes.jpg) ](https://www.baldwincpas.com/insights/the-importance-of-filing-quarterly-payroll-tax-returns) #### [The Importance of Filing Quarterly Payroll Tax Returns](https://www.baldwincpas.com/insights/the-importance-of-filing-quarterly-payroll-tax-returns) [Baldwin CPAs](https://www.baldwincpas.com/insights/author/baldwin-cpas) : 5/15/24 10:46 AM Businesses with one or more employees are required to withhold and remit taxes. Depending on the filing status of the employer, the returns are... [Elevate](https://www.baldwincpas.com/insights/tag/elevate) [Read More](https://www.baldwincpas.com/insights/the-importance-of-filing-quarterly-payroll-tax-returns)