The Basics of Successful Business

Abstract

Teaching students the importance of accounting in life as well as in business. Understanding the basic knowledge of accounting. Learning to use the correct business terminology. Understanding the five functions of a business: assets, liabilities, owner's equity, revenue and expenses.

The Basics of Successful Business

Learning the basics of accounting will help you not only in your business endeavors but also in your personal life. In order to be successful in learning these truths, one has to be willing to not only learn accounting but also cognize the principles and apply them. Accounting secrets unleash the balance in a business as well as stabilize your personal finances as well. To understand accounting, one must learn the terminology.

Starting with the very basics of accounting, you must learn that Debit is the increase of assets while Credit is the increase of debt. The debit is always written on the left side while credit is on the right. Be sure not to confuse the information with debit and credit in your daily finances; it is actually the opposite concept. In a business, during the occurrence of a transaction, both sides of the balance sheet are affected. For example if your assets are debited by $100 make certain that your expense account is credited $100; assets are increased while expenses are decreased. An asset is something your business owns or does not cost extra cash to uphold. An expense is a payment of sorts; like a client dinner or the purchase of more supplies or material.

Another point to remember is terminology. Some of the very basic terms that one needs to know in accounting is liability. A liability is something that the business does not own and may have to make a payment on in the future. An alternative name for liabilities accounts payable. An accounts payable account is some sort of an account that the business does out right; it is an account that the business will pay on. Revenue is the amount of gross money brought in from a service or an item sold. Owner's Equity is the remaining value left in a business after the liabilities have been paid (Editorial Board, 2012). Owner's equity is calculated by subtracting the liabilities from the assets; the total is called owner's equity. These six terms are the basics of accounting. These basics need to be known in order to grasp the concept of accounting.

Accounting plays a big role in our lives whether we own our own business or not. Everywhere we go to shop or to purchase a service is based on the foundation of accounting. For example a business prices their goods or services based on meeting their personal revenue goals, we as the consumer decided if their quota goals line up with our monthly budget. Even though I have a hard time with accounting, I understand