{"id":424,"date":"2016-02-01T20:52:18","date_gmt":"2016-02-01T20:52:18","guid":{"rendered":"http:\/\/it-toolkits.org\/blog\/?p=424"},"modified":"2016-07-11T07:52:32","modified_gmt":"2016-07-11T07:52:32","slug":"assets-liabilities-manager-need-know","status":"publish","type":"post","link":"https:\/\/it-toolkits.org\/Blog\/assets-liabilities-manager-need-know.html","title":{"rendered":"Assets & Liabilities: What Does An IT Manager Need To Know?"},"content":{"rendered":"

As an IT manager, you have a responsibility to your team to be able to keep them informed on the economic health of the company. Every company goes through periods of up and down, boom and bust, economic results. Your responsibility is to be able to\u00a0understand what the company\u2019s current financial situation is<\/strong> no matter what the current management is or is not saying and to be able to show some leadership and be able to clearly explain it to your IT team. This means that you\u2019re going to have to have a good understanding of just exactly what assets and liabilities are.<\/p>\n

What Are Assets?<\/h2>\n

Your company\u2019s financial statement starts with a listing of its assets<\/strong>. Remember that assets are things that the company invests in so that it can make money. On the financial statement, the assets that can be most easily converted into cash will be listed first. This will include such things as cash on hand, marketable securities, receivables, and inventory. Grouped together, these are called\u201ccurrent assets\u201d.<\/p>\n

A good way to think about current assets<\/strong> is to view them as being assets that can be converted into cash within one year.<\/p>\n

The next items listed under assets on the company\u2019s financial statement are what are called the \u201cfixed assets\u201d<\/strong>. These are assets that would be tougher to convert into cash. This can include such things as buildings and equipment.<\/p>\n

One final note on fixed assets. As a general rule, these types of assets depreciate over time<\/strong> (become less valuable because of wear and tear) and so the company will keep track of how much their value has been decreased by a term called \u201caccumulated depreciation\u201d.<\/p>\n

What Are Liabilities?<\/h2>\n

The other side of the coin when you are talking about assets are liabilities. Liabilities are money that is owed to creditors. The claims of creditors that typically must be repaid within a year are called\u201ccurrent liabilities\u201d<\/strong>.<\/p>\n

If you subtract the company\u2019s current liabilities from its current assets you end up with what is called the company\u2019s \u201cnet working capital\u201d<\/strong>. This is how much money the company has tied up in its short-term operating activities.<\/p>\n

Every company also has what are called \u201clong-term liabilities\u201d<\/strong>. These include such things as bonds and mortgages. If you subtract the company\u2019s total liabilities from the company\u2019s total assets you end up with the owner\u2019s equity. This is also referred to as being the \u201cretained earnings\u201d.<\/p>\n

What Does All Of This Mean To You?<\/h2>\n

IT managers have a responsibility to be able to explain the current state of the company to their IT teams. This means that IT managers who want to be able to understand their company\u2019s financial statements need to start with an understanding of what assets and liabilities are<\/strong>.<\/p>\n

Assets are things that the company invests in so that it can make money<\/strong>. On a financial statement assets are listed in the order in which they can be converted into money. Liabilities are money that is owed to creditors. On a financial statement liabilities are listed in terms of both short term current liabilities and long term liabilities.<\/p>\n

No, an IT manager does not have to become an accountant in order to understand the company\u2019s financial statements. However, a knowledge of some of the basic terms<\/strong> is required so that you\u2019ll be able to ensure that your IT dream team knows what\u2019s going on with the company.<\/p>\n","protected":false},"excerpt":{"rendered":"

As an IT manager, you have a responsibility to your team to be able to keep them informed on the<\/p>\n","protected":false},"author":1,"featured_media":346,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[],"class_list":["post-424","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-it-budget-management"],"_links":{"self":[{"href":"https:\/\/it-toolkits.org\/Blog\/wp-json\/wp\/v2\/posts\/424"}],"collection":[{"href":"https:\/\/it-toolkits.org\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/it-toolkits.org\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/it-toolkits.org\/Blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/it-toolkits.org\/Blog\/wp-json\/wp\/v2\/comments?post=424"}],"version-history":[{"count":0,"href":"https:\/\/it-toolkits.org\/Blog\/wp-json\/wp\/v2\/posts\/424\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/it-toolkits.org\/Blog\/wp-json\/wp\/v2\/media\/346"}],"wp:attachment":[{"href":"https:\/\/it-toolkits.org\/Blog\/wp-json\/wp\/v2\/media?parent=424"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/it-toolkits.org\/Blog\/wp-json\/wp\/v2\/categories?post=424"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/it-toolkits.org\/Blog\/wp-json\/wp\/v2\/tags?post=424"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}