Agribusiness
Library
LESSON L060086: ASSETS AND LIABILITIES
Objectives
1. Define current assets and identify examples of
current assets.
2. Define non-current (or long-term) assets and
identify examples of non-current assets.
3. Define current liabilities and identify
examples of current liabilities.
4. Define non-current (long-term) liabilities and
identify examples of non-current liabilities.
Terms
•Accounts payable
•Accounts receivable
•Assets
•Buildings
•Capital assets
•Cash
•Current assets
•Current liabilities
•Interest on liabilities
•Land
Terms
•Liability
•Long-term leases
•Machinery
•Non-current (or long-term) assets
•Non-current (or long-term) liabilities
•Operating loans
•Pension funds
•Pre-paid expenses
•Principal balances on loan
Terms
•Principal payments on non-current liabilities
•Rent payments
•Stocks
•Taxes
•Wages

Assets are items that an
individual or business owns that
can be listed on a financial
statement.

Current assets are items that an individual or business
owns that can be sold to generate cash quickly.


Examples of current assets include:
A. Cash —assets in the form of cash, checking
account, or savings account values.

Estimated cash value can also be applied to stored grain,
market livestock, and other agriculture products, such as
hay or straw.

B. Stocks —shares of capital that an individual or
business can own and resell.



Stocks increase and decrease in value due
to the fluctuation of the market and
economy.
C. Accounts receivable —income an
individual or business is expecting to
receive for products or services.
D. Pre-paid expenses —business expenses that
have been paid for that have not yet been used,
such as fertilizer, seed, and chemical expenses.

Non-current (or long-term) assets are products
and inventory an individual or business owns that
will be used for more than one calendar year.



Examples of non-current (or long-term) assets are:
A. Land —any acreage area owned
by an individual or business.
B. Buildings —permanent
structures that are owned by an
individual or business.

Examples of buildings include sheds, grain bins, garages,
pole barns, or any other permanent structure.

C. Machinery —engine-powered equipment that can
be used for business or personal use.


D. Capital assets —include any personal assets that are
used for business purposes that will last for more than
one year.


Examples of machinery include trucks, tractors, sprayers,
ATVs, lawn mowers, irrigation equipment, or any other types
of equipment.
This may include equipment or breeding livestock.
E. Pension funds or other long-term investments—
money deposited with a financial institution to create a
retirement fund.

Often, a business will automatically deduct a certain portion
of each employee’s paycheck to deposit into a pension fund.


Liability refers to money
owed for a product or service.
Current liabilities are items
that must be paid within the
next year.


Examples of current liabilities are:
A. Accounts payable —bills that are owed to
businesses or individuals within the current
operating year.

Examples may include seed, chemical, feed, or fertilizer
bills.


B. Operating loans —money that is borrowed in
order to cover immediate expenses necessary for
the business to function.
C. Taxes —money owed to the
government.


A percentage of each dollar of
income is paid to the government
in the form of taxes.
D. Rent payments —money owed to owners of
property in exchange for the use of their land,
buildings, pasture, or other property or structures.


E. Interest on liabilities —money
owed to financial institutions in
exchange for money borrowed.
F. Principal payments on non-current liabilities
—the initial payment for items that are purchased
within the current year.


The value of the capital item will be classified as a noncurrent asset, whereas the remaining value owed on the
item is a non-current liability.
G. Wages —payments made to employees in
exchange for their service.

Non-current (or long-term) liabilities refers to
money owed on a product, service, or inventory
item.



Examples of non-current (or long-term) liabilities include:
A. Long-term leases —agreements made with
property owners where money is owed to the owner
in exchange for the use of the property.
B. Principal balances on loans (for land, buildings,
machinery, or other capital items)—the total amount
of money left over on a loan that must be paid
before transferring ownership.
REVIEW
•What are current assets and what are some
examples of current assets?
•What are non-current (or long-term) assets
and what are some examples of non-current
assets?
REVIEW
•What are current liabilities and what are
some examples of current liabilities?
•What are non-current (or long-term)
liabilities and what are some examples of
non-current liabilities?