Business-Accounting-Part2

Elements of Accounting

Assets
Liabilities
Revenue
Owners Equity
Expenses

Assets

Tangible or intangible things a business owns or controls and it has an economic value

Liabilities

The payments the business has to pay (such as loans) at the end of an accounting period to a person or business

Owners Equity

The amount of capital the owner of the company invests for the business

Revenue (income)

The amount of money brought into the company and also anything that increases the assets of the business

Expenses

The operational cost which is paid to earn business revenues

The Accounting equation

Assets = Liabilities + Owners Equity

Importance of Accounting

1.Understanding your Business
2.Keeps the Business organized
3.Year-end reports
4.Decision making