New definition of asset and liability

Rizal Philippines
July 24, 2019

Any accounting  or business course graduate will tell you is anything that eats or uses funds:  a car, a house, appliance  or anything bought with your money.  A liability is what you owe to a lender, to an appliance factor. etc.

But a new definition came in from financial advisers.

Asset is anything that generates income for the holder:  stocks bonds, deposits in banks or income generating properties.  Or a raw land that appreciates in value...

Anything that requires expenses and creates liabilities for you is a liability like a car that requires amortization, fuel, insurance repair cost.    Before you buy anything think about this definition  Is the equipment machinery or the thing to be bought bringing in positive or negative cash flow.  Prefer the ones that bring in positive cash flow.

What about a 6 figure carbon fiber bike:  all Italian:  frameset, group set, and wheel set.   Is it an asset or liability?

In the course of our business partnerships, we bought inventories which we were unable to sell ASAP. The father of the partner was criticizing us for the failed goal of selling the ash crypts.  But we did not lose anything