Knowledge of accounts can make life much easier. If you are investing in a new business or joining your forefather company, planning to take some loan, looking for employment in any marketing company, desire to be the manager of a multinational company or have the responsibility to manage their own assets and liabilities, knowing some basics of accounts becomes mandatory.
In general, accounting bifurcates into two groups:
Cash Basis of Accounting
Accumulation
Cash accounting related to the management of personal monetary transactions of an individual. In this case, does not lose sight of the money he withdrew, deposited, gave or received from someone etc. This accounting comes to life when cash transactions actually take place.
Accrual accounting requires an accountant who notes the transactions even if no amount is actually exchanged. This method works on the principle of comparing or seeing the ratio of costs to expense. If the expenditure is more, you must reduce your luxuries, if not always good to have some savings for the future. This type of accounting tells you the amount you need, which may not correspond with the figure of your bank balance.
The language of accounting there are several key terms that you know. Some of the crucial importance will be discussed below-
The corresponding resource, then usually the property of an individual who is a good market value or are very valuable. The activities are mainly classified into three different
Cash assets-current assets is the most basic of every individual. The money is in accounts such as checking and savings accounts is also included in cash. Also included are securities such as bonds, stocks, shares etc. The money lent or payments due from customers, even part of it.
The assets include all tangible things of value, such as real estate, machinery, equipment, land, and do not intend to sell.
Intangible assets include all untouchable things like copyrights, patents, trademarks, etc. that have tremendous monetary significance.
The law of opposites governs the nature, where there are assets, there will be liabilities. This is the debt you to repay your creditors. This can be done by giving cash or other assets such as jewelry, other goods etc. Liabilities again are of two kinds:
1. Short-term liabilities, debts must be paid back some time, and especially through short-term assets. These accounts are the type that you have to pay monthly bills, notes payable-bank loans to be repaid within 30 days and deferred-compulsory expenditure, such as taxes, salaries, benefits, etc. If you have not received the bills, but everyone is a balance to be repaid.
2. Long-term liabilities, debts that can not be repaid at ease for the occupation is over a month.
Financial capital is financial capital. It 'a liquid medium or merchandise, which means that the wealth or other styles or capital. There are four ways to manage and display the financial capital. First, this capital is needed when the contract is made for any capital activities. The financial instruments work in the form of money when buying, selling or exchange of goods or the medium. Secondly, it is solved in the medium or manner as the gold
Standard of deferred payment. Third, the unit has a market value attached to it, which in turn varies with the country's economy. Fourth, it is the source of value involved in the financial capital to be saved and retrieved. This is a collection of things like gold, real estate, collectibles etc.
Petty Cash is an important factor in business. It is the smallest account in a business environment or the money in notes and coins needed to pay little.
Such cases there are several types of businesses to be aware of such
Sole proprietorship, where a single individual who starts the business of your property too.
Associations, companies or businesses started by two or more persons are co-owners.
Companies with a lot many shareholders or investors, who are responsible for decisions for the company.
Limited liability companies can be said of the sister companies. Here, the affiliated companies are not subject to a legal obligation to pay the debts if the business fails.
Payrolls-time wage refers to the way in which you must pay the employees of your company and even yourself. Many multinational companies serving the payroll service, which operate quite effectively.
Here are some general guidelines that will help you understand the basics of accounting. It is important to have some of the wisdom for accounts as it is successful in all areas of life.