Accounts software for business, Accounting defined as the production of monetary information. It means accounting allows us to ascertain things like what proportion money you’re earning, so, what proportion you’re worth, what proportion money you spend and where you’ll improve to form even more money!
Assets defined as resources that help generate profit in your business. You have some control over it.
Therefore, To make your famous cream cake, you need your oven. These two things are examples of assets.
To be an asset it has to satisfy three requirements:
- Firstly,It’s something you have control over
- Secondly, You have control as a result of a past event
- Thirdly, It has a future economic benefit
Liability defined as obligations that your business needs to fulfill. In simple words, Liability means credit.
A liability requires three things:
- Presents the business with an obligation
- The Obligation is a result of past events
- Settling the obligation will require an outflow of valuable resources
What is the Accounting Equation?
The Accounting Equation based on the double entry accounting, which says that every transaction has two aspects, debit and credit, and for every debit there is equal and opposite credit. It helps to prepare a balance sheet, so it is also called the Balance Sheet Equation