Know the difference between an asset and a liability. Even for some of us accountants, the clarity between assets and a liability is not so clear. For example, is a car an asset?
Take the following test:
Does your car have potential to increase future cash flows?
Does the benefits your car offers exceed the costs of ownership in the long term?
Does your car have a resale future value higher than the purchase and maintenance costs combined? Does your asset have readily available buyer anytime you would want to dispose of it?
You get the idea.
An asset should bring you income that exceed the […] Read more