Basic Accounting Terms

Assets – An asset is merely a thing a company purchases, produces, or receives in trade that it uses to obtain and secure future profits.

Debits and Credits – Too many people suffer from debit and credit confusion.

Liabilities – A liability is something owed to another usually in return for an asset.

Owner’s Equity – Owner’s equity is the amount of a business not financed by liabilities. It represents the degree of ownership over a business. It is synonymous with net assets and shareholder’s equity.

T-Accounts – A t-account is a great visual tool that helps you figure out what happened in an accounting transaction.

For detailed explanation with examples, visit learn-basic-accounting.com.

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