Assets and liabilities are two of the key components of a business’s financial statement. An asset is something that an entity owns, such as cash, investments, accounts receivable, inventory, equipment and buildings. A liability is a legal obligation of an entity, such as a loan or credit. Assets help a business generate revenue by providing capital to purchase goods, services or invest in other resources. Liabilities, on the other hand, represent money owed to other entities for goods purchased or services rendered. It’s important for businesses to be mindful of their assets and liabilities to protect their financial health. Knowing what assets are available and what liabilities need to be paid off gives businesses the ability to plan accordingly and make informed decisions about how to best use their resources.