It’s such accrual world we live in OK, accounting pun there in the title – sorry about that! But in this post we are going to review what is known as the accrual concept (which for students of accounting can be a very cruel thing to understand – ba-dum Tsss! The accrual concept essentially states
Ok, so far we have covered off Assets, Liabilities and Equity. So you know the basics of what makes a business tick. But let’s say you are a business owner and you’ve started your own thing – what you will be dealing with daily are Income and Expenses. First off, lets start with Income: Income
Assets are good – they are always good. I cannot objectively think of any situation where assets are anything BUT good. An Asset is basically anything that generates wealth for your business (or yourself) that you own. Note that the key word here is “wealth”, not “money”, but “wealth”. This is because money, as in
Liabilities. Liabilities are bad. Well, not bad like cocaine bad (don’t do drugs kids!), but more bad in the sense that having 10 Jelly donuts in one sitting is bad for you (I’ve never tried it before myself, but I can imagine it’d be pretty bad). A liability is basically anything that you owe to