January 22, 2021

SB-Accounting

Accounting + Finance Blog

Key Differences: Noncurrent Assets and Noncurrent Liabilities

Key Differences: Noncurrent Assets and Noncurrent Liabilities
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In the previous article, the differences between current assets and liabilities was explained. This article will take a look at that of noncurrent assets and liabilities.

Six differences between noncurrent assets and liabilities

Definition: Noncurrent assets are economic resources available to an entity for more than one year. Current liabilities are obligations or debts which the entity must pay more than a year.

Type: Noncurrent asset is a type of assets. Noncurrent Liability is a type of liabilities.

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Examples: Examples of noncurrent assets are property, plants and equipments (PPE), investment assets, Agricultural assets, Goodwill, etc

Examples of non-current liabilities examples are deferred tax liabilities, long term loan, debentures, etc.

Cash flow: For noncurrent assets it is expected to result in cash inflow. But noncurrent liabilities result in cash outflow.

READ ON  Meaning of Current assets and key Explanations

Position in statement of financial position: Noncurrent assets appear as first headline items in the statement of financial position except for financial institutions.

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Noncurrent liabilities, however, appears below assets (and in some cases, capital) in a statement of financial position.

Conclusion

The six differences between non current assets and liabilities are not exhaustive. However, the main point is that assets belong to the business while liabilities are owned by stakeholders outside the entity.

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