Abstract
The conceptualization of assets and liabilities is fundamental to an understanding of financial accounting. It is often maintained that assets and liabilities represent economic resources and economic obligations, respectively, but that not all economic resources are assets and not all economic obligations are liabilities — a somewhat confusing state of affairs. This paper presents a schema for distinguishing assets from economic resources and liabilities from economic obligations based on the authoritative literature in the United States, Australia, Canada and Great Britain. The schema should be useful for clarifying certain financial accounting controversies concerning income taxes, leases, pension benefit payments and executory contracts.
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