Assets & Liabilities
Assets are things you own that have value.
Liabilities are debts you owe.
Together, assets and liabilities help you understand your overall financial position—not just how much cash you have today.
Net worth is the difference between the two:
Net Worth = Assets − Liabilities
Why Assets & Liabilities Matter
Understanding assets and liabilities helps you see what you truly own versus what you owe.
This can help you:
Understand your true financial position (beyond your bank balance)
Track net worth over time to measure financial progress
Make better decisions about debt and large purchases
Use reports more effectively, including net worth and balance sheet-style reporting
What Counts as an Asset or Liability
Common assets
Assets may include:
Checking and savings balances
Investment accounts
Accounts receivable (money clients owe you)
Business equipment or tools
Inventory
Real estate
Vehicles
Common liabilities
Liabilities may include:
Credit card balances
Loans and lines of credit
Mortgage balances
Car loans
Unpaid bills (accounts payable)
Tip: If you want a more complete net worth picture, you can manually track certain assets (like property, vehicles, or equipment) even if they aren’t connected to a bank.
How Assets & Liabilities Work
Assets and liabilities work together to show your financial position at a specific point in time. Many transactions affect one side of the equation—and some affect both.
Buying equipment with a credit card (business)
You buy a $3,000 laptop using a business credit card.
Assets increase (you now own equipment)
Liabilities increase (you now owe the credit card company)
Net worth stays the same (asset and debt increase by the same amount)
As you pay down the credit card, your liabilities decrease—improving your net worth.
Paying down a loan (personal or business)
You make a $500 loan payment.
Cash decreases (an asset goes down)
Loan balance decreases (a liability goes down)
Your net worth may not change in that moment, but reducing debt can strengthen your financial position over time.
Sending and collecting an invoice (business)
You invoice a client for $5,000.
Accounts receivable increases (asset: money owed to you)
When the client pays:
Accounts receivable decreases
Bank balance increases
This helps you track what you’ve earned versus what you’ve received.
Where to Find Assets & Liabilities
You can view your overall asset and liability picture in the Net Worth
To view totals at a glance:
Accounts → Net Worth (card)
To see trends over time:
Reports → Net Worth Report
Typical asset accounts include:
Checking and savings accounts
Investment accounts
Client invoices / accounts receivable
Manually tracked assets (property, vehicles, equipment)
Typical liability accounts include:
Credit cards
Loans
Mortgages
Lines of credit
Best Practices
Track both sides for a complete picture. Net worth is only meaningful when assets and liabilities are both accounted for. A net worth figure that only reflects your bank accounts and ignores your mortgage or loan balances isn't telling you much.
Separate business and personal accounts when possible. For small business owners, keeping business and personal accounts distinct makes reporting cleaner and decision-making clearer. A business balance sheet should reflect business assets and liabilities — not your personal mortgage.
Start with the accounts that matter most and build from there. You don't need to track every asset you own on day one. Begin with your bank accounts, credit cards, and loans. Add investment accounts, property, and manually tracked assets over time as you want a fuller picture.
Check your net worth trend, not just the number. A single net worth figure is interesting. Watching it move over months and years is where the real insight is. A slow, consistent upward trend — even in small amounts — is a meaningful signal that your financial position is improving.