In series of new posts, you'll get to read more about the different key parts of the accounting system. Each will be addressed separately. Here's the primer, briefly re-visiting earlier material.
ASSETS: These are the things you own. They include cash, money people owe you value carried from a business purchase, investments, buildings, furnishings, tools, vehicles and more. There are also things called "contra-assets" that offset, or count against the value of certain assets.
LIABILITIES: This is the money or other things you owe to other people. Accounts payable - your regular vendors that let you buy things and send you a bill to pay later, taxes, withholdings from employees, loans, mortgages, etc.
EQUITIES: This is the "net value" of your company. Equity is also known as capital. This is where the term "capitalist economy". It is reflected as owners, partners' or stockholders' equity. When you get to this part of the financial statements, you see what's left after all other claims against the business have been taken into account.
REVENUE: This is any income your business receives as a result of trying to get paid for goods or services. Occasionally, a business receives payment for reasons outside of its normal activities. This is called "other income". Interest earned on a bank account is an example.
EXPENSES: These are what you pay for running your business. Expenses will run from pipe you use in a plumbing business to the coffee you use in your company kitchen. Like revenue, this has a classification of "other expenses".
Come back soon. Class will continue shortly.
Gary
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