Accounting is the job that is done to make sure you know;

Monday, September 27, 2010

• how you have spent your money on things used to manage your business (expenses - things that are used up quickly in your business - pens, paper, electricity, telephone long distance etc)

• how much money you have taken in from sales or from customers who have bought your product or service (revenues)

• how much money you owe to suppliers (people or companies you have purchased things from and that you have not paid yet) or the liabilities of your business,

• how much money you owe to lenders (companies - usually banks) who have let you use their money for a charge of interest (usually a payment each month) and the repayment of the principal (the amount that you owe them) - also liabilities,

• how much you have in equipment and other objects that have a long use or economic life, which are assets (computers, desks, chairs, - assets)

• how much money you are making (profit or earnings),

• how much money your business is worth (equity or the difference between assets and liabilities)