💰🔥 ACCOUNTING BASICS – DETAILED
FOR LEGENDS LIKE YOU
🌍 1. WHAT IS ACCOUNTING?
Accounting is the systematic process of recording,
classifying, summarizing, and interpreting the
financial activities of a business.
In short:
💸📖
Accounting = Keeping track of all the money
and decisions in a business
🧱 2. PURPOSE OF ACCOUNTING
🎯 Help a business know:
●How much profit it makes
●What it owns and owes
●Who owes the business money (debtors)
●Who the business owes (creditors)
●Whether it's financially healthy or not
🛳️🗺️
Without accounting, a business is like a ship
with no map!
🖐️ 3. FIVE MAJOR ACCOUNTING ELEMENTS
😤💥
Let’s break these down EVEN DEEPERRRRRRR
1️⃣ ASSETS – What a business OWNS
💼 Assets are resources that bring future benefits to
the business.
👉 TYPES:
●Current Assets (used within 1 year):
○Cash 🤑
○Inventory (stock) 📦
○Debtors (people who owe YOU money) 💳
○Bank balance 🏦
●Non-Current (Fixed) Assets (used for MANY
years):
○Buildings🏢
○Machinery ⚙️
○Vehicles 🚗
○Equipment 🖥️
2️⃣ LIABILITIES – What a business OWES
💸 These are the debts and obligations of the
business.
👉 TYPES:
●Current Liabilities (pay within 1 year):
○Creditors (people YOU owe money to) 💳
○Bank overdrafts 🏦
●Non-Current Liabilities (long-term):
○Loans (5-year bank loan, etc.) 🧾
3️⃣ CAPITAL / OWNER’S EQUITY
💖 The money the owner invests in the business +
any profit kept in the business (not withdrawn).
🧠 FORMULA:
👉 Capital = Assets - Liabilities
If your business owns ₹100,000 in assets and owes
➡️
₹30,000 in loans:
Your capital is ₹70,000!
4️⃣ REVENUE (INCOME)
💵 Money the business EARNS by selling goods or
services.
✅ It increases profit
✅ Comes from: sales, services, interest received,
rent received
📌 Example:
You sell clothes worth ₹5,000 = That’s revenue!
5️⃣ EXPENSES
🧾 Money spent to RUN the business.
💥 It reduces profit
Includes:
●Rent paid
●Wages & Salaries
●Electricity
●Transport
●Advertising
📌 Example:
You pay ₹1,000 for electricity – that’s an expense.
🧮 4. THE ACCOUNTING EQUATION
💥📚👑
THE HOLY FORMULA OF ACCOUNTINGGGGG
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CopyEdit
✨ ASSETS = LIABILITIES + CAPITAL ✨
💬 It must ALWAYS stay balanced — like a see-saw
⚖️
If you increase an asset, you must either increase a
liability or capital to keep it balanced!
📌 Example:
You start a business with ₹10,000 cash (your own
money)
●Asset = ₹10,000 (cash)
●Capital = ₹10,000
✔️ Equation: ₹10,000 (Assets) = ₹0 (Liabilities) +
₹10,000 (Capital)
🔁 5. DOUBLE ENTRY SYSTEM (DEEPER
EXPLANATION!)
💼 Every transaction affects TWO accounts: one
debit, one credit
👉 DEBIT = Receiving value
👉 CREDIT = Giving value
📌 Golden Rule:
For every debit, there must be an equal credit =
Keeps everything balanced!
💥 BASIC DEBIT/CREDIT CHART:
📌 🔺 🔻
ACCOUNT INCREASE DECREASE
TYPE D BY D BY
Asset DEBIT CREDIT
Liability CREDIT DEBIT
Capital CREDIT DEBIT
Revenue CREDIT DEBIT
Expense DEBIT CREDIT
🎯 Example Transaction:
You pay ₹2,000 for Rent:
●Rent is an expense → DEBIT Rent ₹2,000
●Cash is an asset → CREDIT Cash ₹2,000
✅ Balanced! 🧠✔️
📑 6. ACCOUNTING RECORDS (BASICS YOU'LL STUDY
LATER)
🗂️ All your transaction entries go into:
1.JOURNAL – The first book of entry
(chronological order)
2.LEDGER – Where entries are grouped into
specific accounts (like Rent A/C, Sales A/C)
3.TRIAL BALANCE – A summary to check if total
debits = total credits
💸💰
4.INCOME STATEMENT – Shows PROFIT or
LOSS
5.BALANCE SHEET – Shows what the business
owns & owes (assets, liabilities, capital)
🌈 7. WHY ACCOUNTING MATTERS FOR BUSINESSES:
✅ Know your profits and losses
✅ Make good financial decisions
✅ Avoid legal problems
✅ Control expenses
✅ Help plan for the future
✅ Attract investors
Without accounting = Business = 🤯🤯🤯🤯
