Hi, my question involves listing assets and liabilities for week ending 14th of January for a plumbing company. The plumber has bought some tools on the 8th but is not paying for them until the 23rd. Would I need to list the tools as a fixed asset (as they benifit the company)or a liability (as the list is week ending on the 8th so they would be an asset or a liability as money will be going out after this date, on the 23rd, to pay for them?),

any help would be very much appreciated.

To determine how to classify the tools in the plumbing company's financial statements for the week ending January 14th, you need to consider the concept of recognition and the applicable accounting principles.

In this situation, you need to consider whether the tools meet the criteria to be recognized as fixed assets. According to general accounting principles, an asset should meet two essential criteria:

1. Control: The plumbing company must have control over the tools, meaning they have the right to use them and obtain future benefits from their use.
2. Probable future economic benefits: The tools should be expected to generate economic benefits for the plumbing company in the future.

In your case, as the plumber has already bought the tools, it indicates that the plumbing company has control over them. Since the tools are expected to benefit the company in its plumbing activities, they generally fulfill the criteria of probable future economic benefits.

Therefore, for the week ending January 14th, you would classify the tools as a fixed asset in the plumbing company's financial statements. This classification acknowledges that the company holds the tools as an asset that will provide future benefits.

Although the payment for the tools will occur on the 23rd, classified as a liability, for reporting purposes the tools themselves are considered an asset as of the week ending January 14th. It is important to distinguish between the timing of cash flows (liability) and the classification of the underlying asset (fixed asset).