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
Equity is mostly good, but not like Asset-level good, but good like the weather is nice and sunny and you’re going out for a jog and then the weather decides to start raining. Hard. Equity is essentially money brought into the business by the business owners. So, if you, as an individual, own a business