Simple accounting
Accounting is the process of writing down, sorting, summarizing, and explaining
the financial moves of a firm. It lets people like owners, backers, bosses, and
rule makers know how a firm is doing money-wise, helping them make wise
choices. Often called the "talk of trade," accounting gives must-know money
facts that show off the cash work of a group.
What accounting aims to do
- Writing down money moves in an ordered way.
- Figuring out if there's a gain or loss over a set time.
- Showing the money state of a firm with lists like the balance sheet.
- Making sure rules and laws are followed.
- Giving key money facts to people involved for smart choosing.
Basic accounting rules
1. Assets: Things a company owns (like cash, tools, stock).
2. Liabilities: What a company owes to others (like loans, bills to pay).
3. Equity: What the owner holds in the company after taking out debts.
4. Revenue: Cash made from selling things or giving out services.
5. Expenses: Money spent to make more cash.
6. Profit (Net Income): Cash left after paying all costs.
The Money Rule At the heart of money work is this rule:
Assets = Liabilities + Equity
This rule must always match and show up on the balance sheet.
Double-entry bookkeeping
In the double-entry way, each money move hits at least two spots. This way
keeps it true and full by keeping up with the bookkeeping rule. Each move has a
debit side in one spot and a credit side in another, and the full debits must
match full credits. Example: To buy gear with cash: Debit Gear, Credit Cash.
Money Reports There are four main money reports in bookkeeping:
1. Income Report—Tells how the firm did over time, showing money in, costs,
and end money.
Accounting is the process of writing down, sorting, summarizing, and explaining
the financial moves of a firm. It lets people like owners, backers, bosses, and
rule makers know how a firm is doing money-wise, helping them make wise
choices. Often called the "talk of trade," accounting gives must-know money
facts that show off the cash work of a group.
What accounting aims to do
- Writing down money moves in an ordered way.
- Figuring out if there's a gain or loss over a set time.
- Showing the money state of a firm with lists like the balance sheet.
- Making sure rules and laws are followed.
- Giving key money facts to people involved for smart choosing.
Basic accounting rules
1. Assets: Things a company owns (like cash, tools, stock).
2. Liabilities: What a company owes to others (like loans, bills to pay).
3. Equity: What the owner holds in the company after taking out debts.
4. Revenue: Cash made from selling things or giving out services.
5. Expenses: Money spent to make more cash.
6. Profit (Net Income): Cash left after paying all costs.
The Money Rule At the heart of money work is this rule:
Assets = Liabilities + Equity
This rule must always match and show up on the balance sheet.
Double-entry bookkeeping
In the double-entry way, each money move hits at least two spots. This way
keeps it true and full by keeping up with the bookkeeping rule. Each move has a
debit side in one spot and a credit side in another, and the full debits must
match full credits. Example: To buy gear with cash: Debit Gear, Credit Cash.
Money Reports There are four main money reports in bookkeeping:
1. Income Report—Tells how the firm did over time, showing money in, costs,
and end money.
