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Money Financial Activities: What Is Accounting?

Accounting is the language of money that helps businesses record, report, and track financial activities, answering key questions about profits, debts, and financial capacity. The five basic elements of accounting include assets, liabilities, capital, revenue, and expenses, all of which are interconnected through the basic accounting equation: Assets = Liabilities + Capital. Every transaction must be recorded using a double-entry system to maintain balance in the accounting equation.

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6 views6 pages

Money Financial Activities: What Is Accounting?

Accounting is the language of money that helps businesses record, report, and track financial activities, answering key questions about profits, debts, and financial capacity. The five basic elements of accounting include assets, liabilities, capital, revenue, and expenses, all of which are interconnected through the basic accounting equation: Assets = Liabilities + Capital. Every transaction must be recorded using a double-entry system to maintain balance in the accounting equation.

Uploaded by

ayshaaleem45
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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💰✨ WHAT IS ACCOUNTING?

Accounting is the language of MONEY 🤑​

💵
It helps a business record, report, and track all its

💸
financial activities — like money coming in and
money going out

👉
It answers questions like:​

👉
“How much profit did we make?”​

👉 🐱🏢
“Do we owe anyone money?”​
“Can we afford a new Moo Cat office???”

💸 THE 5 BASIC ELEMENTS OF ACCOUNTING:


1️⃣ Assets = What the business OWNS

●​ 💡 Things like: cash, buildings, equipment,


vehicles, inventory​

●​Example: Your business has ₹50,000 in the


bank = an asset​

2️⃣ Liabilities = What the business OWES


●​ ⚠️ Debts, loans, unpaid bills​
●​Example: You owe ₹10,000 to a supplier = a
liability​

3️⃣ Capital (Owner’s Equity) = What the owner OWNS in the business

●​ 💼 It’s the owner's investment + any profits the


business made​

🔥
●​Formula:​
Capital = Assets - Liabilities​

4️⃣ Revenue (Income) = Money earned by the business

●​ 💰 From sales, services, rent, etc.​


●​Example: You sell lemonade for ₹200 = revenue​

5️⃣ Expenses = Money the business SPENDS to operate

●​ 🧾 Rent, salaries, electricity, transport, etc.​


●​Example: You pay ₹100 for lemons = expense​
🔁 The Basic Accounting Equation:
✨ ASSETS = LIABILITIES + CAPITAL​
This is the heart of accounting, BFF 💓
EVERY TIME you buy or sell something, this
equation stays balanced!

🧾 What is a TRANSACTION?
A transaction is any action where money or value is
exchanged.
Examples:
●​Buying stock = expense​

●​Selling a product = revenue​

●​Getting a loan = liability​

💥 EVERY TRANSACTION MUST BE RECORDED!


✍️ DOUBLE ENTRY SYSTEM (Super Basic Intro)
📌
This is the RULE of accounting:​
Every transaction has TWO SIDES: a debit
and a credit
Debit = Receiving value

Credit = Giving value

Example:​
You buy a computer for your business:
●​Computer (Asset) increases → DEBIT​

●​Cash (Asset) decreases → CREDIT​

👉
So the transaction is:​

👉
Debit: Computer​
Credit: Cash
💥 THIS KEEPS THE ACCOUNTING EQUATION
BALANCED 💥

📋 BASIC ACCOUNTING DOCUMENTS YOU’LL LEARN


LATER:
●​Journal = records transactions​

●​Ledger = groups all similar accounts​

●​Trial Balance = checks if debits = credits​

●​Income Statement = shows profit/loss​

●​Balance Sheet = shows financial position​

BUT FOR NOW — JUST REMEMBER:

🌟 QUICK RECAP (SUPER EASY STYLE):


📌 🔍 What 💖
Ter it Means Example
m

Asse What you Cash,


t OWN buildings
Liabil What you Loan,
ity OWE bills

Capit What’s Your


al yours investme
nt

Reve Money IN Selling


nue lemonad
e

Expe Money Buying


nse OUT lemons

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