Understanding Assets and Liabilities in Business Bookkeeping SS 1 First Term Lesson Notes Week 5
Subject: Bookkeeping
Class: SS1
Term: First Term
Week: 5
Age: 14-16 years
Topic: Assets and Liabilities
Sub-topic: Definition and Differentiation between Assets and Liabilities
Duration: 40 minutes
Behavioural Objectives
By the end of the lesson, students should be able to:
- Define assets and liabilities.
- Identify different types of assets and liabilities.
- Differentiate between assets and liabilities with examples.
Keywords
- Assets
- Liabilities
- Current Assets
- Fixed Assets
- Current Liabilities
- Long-term Liabilities
Set Induction
Begin with a simple question: “What do you think a business owns and owes?” Allow students to share their thoughts, leading into the concepts of assets and liabilities.
Entry Behaviour
Students have a basic understanding of business terms from previous lessons.
Learning Resources and Materials
- Charts of different types of assets and liabilities
- Examples of financial statements
- Whiteboard and markers
Building Background / Connection to Prior Knowledge
Relate to the previous lesson on stock valuation, explaining that understanding assets and liabilities is critical for assessing a business’s financial health.
Embedded Core Skills
- Critical Thinking
- Financial Literacy
- Analytical Skills
Learning Materials
- Textbooks on accounting and bookkeeping
- Printed examples of balance sheets
Reference Books
Lagos State Scheme of Work, Senior Secondary Bookkeeping Textbooks
Instructional Materials
- Visual aids (charts/graphs)
- Sample financial statements
Content
1. Definition of Assets
Assets are resources owned by a business that provide future economic benefits. They can be tangible or intangible.
Examples of Assets:
- Current Assets: Cash, accounts receivable, inventory, and short-term investments.
- Fixed Assets: Land, buildings, machinery, vehicles, and equipment.
- Intangible Assets: Patents, trademarks, and goodwill.
2. Definition of Liabilities
Liabilities are obligations or debts owed by a business to outsiders, which need to be settled in the future.
Examples of Liabilities:
- Current Liabilities: Accounts payable, short-term loans, and accrued expenses.
- Long-term Liabilities: Mortgages, long-term loans, and bonds payable.
3. Differentiation between Assets and Liabilities
- Nature: Assets are resources that a business owns; liabilities are obligations that a business owes.
- Impact on Financial Position: Assets increase a business’s value; liabilities decrease it.
- Examples in a Balance Sheet: Assets are listed on the left side, while liabilities are on the right.
Evaluation: 15 Fill-in-the-Blank Questions with Options
- Assets are resources ____ by a business.
- a) Owed
- b) Owned
- c) Sold
- d) Leased
- Liabilities represent ____ owed to outsiders.
- a) Income
- b) Resources
- c) Debts
- d) Investments
- Cash is considered a ____ asset.
- a) Fixed
- b) Current
- c) Long-term
- d) Intangible
- Accounts payable is classified as a ____ liability.
- a) Fixed
- b) Current
- c) Intangible
- d) Long-term
- ____ assets include buildings and machinery.
- a) Current
- b) Tangible
- c) Intangible
- d) Current and Fixed
- Goodwill is an example of an ____ asset.
- a) Tangible
- b) Current
- c) Intangible
- d) Fixed
- A mortgage is classified as a ____ liability.
- a) Current
- b) Long-term
- c) Short-term
- d) Fixed
- ____ liabilities need to be settled within a year.
- a) Long-term
- b) Current
- c) Fixed
- d) Intangible
- Equipment is categorized as a ____ asset.
- a) Current
- b) Tangible
- c) Intangible
- d) Current and Intangible
- The balance sheet lists ____ on the left side.
- a) Liabilities
- b) Assets
- c) Equity
- d) Expenses
- Liabilities reduce a business’s ____.
- a) Profit
- b) Value
- c) Assets
- d) Income
- Accounts receivable is an example of a ____ asset.
- a) Fixed
- b) Current
- c) Long-term
- d) Intangible
- Long-term liabilities are obligations due in ____ than one year.
- a) Less
- b) More
- c) Exactly
- d) At most
- Financial statements show a business’s ____ and liabilities.
- a) Equity
- b) Revenue
- c) Assets
- d) Expenses
- Current assets are expected to be converted into cash within ____.
- a) One month
- b) One year
- c) Five years
- d) Ten years
Class Activity Discussion: 15 FAQs with Answers
- What are assets?
- Assets are resources owned by a business that provide future benefits.
- Can you give examples of current assets?
- Yes, cash, accounts receivable, and inventory are examples of current assets.
- What are liabilities?
- Liabilities are obligations or debts owed by a business to outside parties.
- What differentiates current liabilities from long-term liabilities?
- Current liabilities are due within one year, while long-term liabilities are due after one year.
- Are fixed assets the same as tangible assets?
- Not exactly; fixed assets are a type of tangible asset, but not all tangible assets are fixed.
- What is an example of an intangible asset?
- Goodwill is a common example of an intangible asset.
- How do liabilities affect a business’s financial position?
- Liabilities decrease a business’s net worth or value.
- What is the importance of distinguishing between assets and liabilities?
- It helps in assessing a business’s financial health and stability.
- What happens if liabilities exceed assets?
- It indicates that the business may be insolvent or at risk of bankruptcy.
- Can you list some fixed assets?
- Buildings, machinery, and vehicles are examples of fixed assets.
- How are assets listed in a balance sheet?
- Assets are listed on the left side of the balance sheet.
- What impact do current assets have on liquidity?
- Current assets improve liquidity, enabling a business to meet short-term obligations.
- Are all assets valuable?
- While most assets have value, not all contribute equally to a business’s financial stability.
- What role do liabilities play in financing a business?
- Liabilities can provide necessary funds for operations and growth.
- Why is understanding assets and liabilities essential for bookkeeping?
- It ensures accurate financial reporting and helps manage the financial health of a business.
Presentation
Step 1: Revision of Previous Topic
- Review the previous lesson on stock valuation and how it relates to assets and liabilities.
Step 2: Introduction of New Topic
- Introduce the concepts of assets and liabilities, explaining their significance in bookkeeping.
Step 3: Student Contributions and Teacher Corrections
- Encourage students to share examples of assets and liabilities from their daily lives, correcting misconceptions as necessary.
Activities
- Teacher’s Activities: Explain definitions, provide examples, and demonstrate how to identify assets and liabilities on a balance sheet.
- Learner’s Activities: Participate in discussions, provide examples from their experiences, and engage in identifying assets and liabilities.
Assessment: 10 Evaluation Questions
- Define assets in your own words.
- What is the difference between current and long-term liabilities?
- Give an example of a fixed asset and explain why it is classified as such.
- Why are accounts receivable considered current assets?
- How do liabilities impact a company’s net worth?
- Name two examples of intangible assets.
- What type of liabilities are due within one year?
- How are assets and liabilities presented on a balance sheet?
- Why is it important for a business to monitor its assets and liabilities?
- Provide an example of a current liability.
Conclusion
The teacher circulates the classroom, checking students’ understanding and providing feedback on their answers.
Understanding Assets and Liabilities in Business
- The Power of Bookkeeping: Opportunities and Benefits Bookkeeping SS 1 First Term Lesson Notes Week 2
- Learn the definitions of assets and liabilities, their types, and how to differentiate between them with real-life examples for effective bookkeeping
- Mastering Stock Valuation in Business Bookkeeping SS 1 First Term Lesson Notes Week 3
Related Posts


Introduction to Speech Sound (Organs of Speech), Nouns: (Introduction: Definition and Kinds of Nouns) and Introduction to Narrative Essay
SS 1 THIRD TERM EXAMINATION PHYSICS


Operating Systems: GUI vs CLI and Their Functions
About The Author
Edu Delight Tutors
Am a dedicated educator with a passion for learning and a keen interest in technology. I believe that technology can revolutionize education and am committed to creating an online hub of knowledge, inspiration, and growth for both educators and students. Welcome to Edu Delight Tutors, where learning knows no boundaries.