Assets and liabilities constitute two significant items of the accounting equation where the assets are economic resources and liabilities are the obligation due to others. Assets = Liabilities + Equity indicates that the assets have to be financed either through borrowing or the investment of the owner. As liabilities increase, assets are expected to increase as well as in the case when a business takes a loan to buy equipment. On the other hand, liabilities are settled, and hence assets are diminished. The dynamics of the interaction of these two categories can assist businesses to estimate the financial health, and take care of debts, liquidity and ensure that financial statements are correct in terms of obligations, resources and their general stability.