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    Basic Accounting Knowledge: Accounting Elements

    2010/12/21 16:45:00 52

    Accounting Financial Elements

    tradition

    accounting

    The classification of the source of funds and the type of fund occupied has been replaced by six categories of accounting objects, such as assets, liabilities and so on. The six elements are assets, liabilities, owners' equity, income, expenses and profits.

    These six constitute the whole business finance. If you want to know these financial aspects, you should first understand the composition and relationship between the six.

    The details are as follows:


    Assets consist of fixed assets and current assets.


    Liabilities consist of current liabilities and long-term liabilities.


    Owners' equity consists of paid in capital and surplus reserves.


    Income is composed of main business income and extra business income.


    The cost is from manufacturing expenses and operating expenses.

    Administration

    Cost, financial cost and so on.


    Profits consist of items deducted from operating expenses after expenses.


    Assets = Liabilities + owners' equity;


    Owner equity = capital +

    profit

    ;


    Profit = income - cost;


    Assets + expenses (cost) = Liabilities + capital + income;


    Balance of asset class + cost class balance = Liabilities class balance + owner equity class balance + profit and loss account balance.

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