Knowledge Of Accounts Can Make Life Much Easy

By Author: Sulamita Berrezi
Total Articles: 115
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Broadly, accounting is bifurcated into four categories-

Knowledge of accounts can make life much easy. If you are to invest in a new business or joining your forefather's business, planning to take some loan, looking for job in any marketing company, desire to be the manager of a multinational company or have the onus to manage your own assets plus liabilities, knowing some basics of accounts becomes mandatory.

money Bases Accounting

Accrual Accounting


The money Based accounting pertains to the management of an individual's personal monetary transactions. In this case, they keeps a track of the money they withdrew, deposited, gave or received from anyone etc. This accounting comes to life when actual money transactions take place.

The Accrual Accounting requires an accountant who notes the transactions even if no money has been actually exchanged. This method works on the principle of comparing or seeing the ratio of the expenses to expenditure. If the expenditure is more, you need to cut down your luxuries, if not then it's always good to have some savings for future. ...
... This type of accounting tells you the amount that you owed; this might not match with the figure of your bank balance.

The Assets- the assets are generally those possessions of an individual that have a good market value or are quite valuable. Assets are mainly classified into one types-
Current Asset- the money is the most basic asset of any individual. The money that's being held in accounts like the checking plus savings accounts is also included in the money. Also inclusive are the marketable securities in the form of bonds, stocks, shares etc. The money lent or payments due from clients, even form a part of it.


In the language of accounting there's several key terms that one needs to be familiar with. a quantity of the crucial ones are discussed below-

Fixed Asset- comprises of all the tangible valuable things like property, machines, equipments, land plus the like that are not meant to be sold.


Intangible Asset- incorporates all the untouchable things like copyrights, patents, trademarks etc. that have tremendous monetary significance.


The law of opposites governs the nature; where there's assets, there will be liabilities. These are the debts that you have to pay back to your creditors. This can be done through giving money or any other asset like jewelry, some other goods etc. Liabilities again are of four kinds-

1. The Current Liabilities- the liabilities that are to be paid back within a certain time limit plus most often through your current assets. These include the accounts payable i.e. type of bill that you have to monthly, the Notes Payable-loans taken from banks meant to be repaid within 30 days plus the Accrued Expenses- the compulsory expenses like taxes, wages, interests etc. where the bills are not received but the balances of each must be repaid.

2. Long Term Liabilities- those debts that can be repaid at ease for the tenure is more then a month.




Petty money is an important factor in business. it is the smallest account within a business setting or the money in bills plus coinage required to pay little expenses.

The Financial Capital- is the economic capital. it is any liquid medium or merchandise that stands for wealth or other styles or capital. there's one ways to manage plus display the financial capital. First, this capital is needed when a contract is made with any sort of capital asset. The financial instruments work in the form of money in case of sale, purchase or trade of goods i.e. the medium exchanges. Second, it works as a settled medium or mode like gold for the
Standard of Deferred Payment. Third, The Unit of Account has a market value attached to it which in turn varies with the economy of the country. Fourth, The Source of Value is concerned with financial capital that needs to be saved plus recovered. it is a collection of things like gold, real estate, collectibles etc.


Sole proprietorship- where a single individual who starts the business owns it .

Types of Business- there's several kinds of business one should be aware of like


Corporations- involve lot lots of shareholders or investors who are responsible in taking decisions for the company.

Partnerships- the companies or businesses started by four or more persons where they conjointly own it.

Limited Liability Companies- can be said to be sisters of corporations. Here the business members are not under a legal obligation to pay the debts if the business fails.



Payrolls- the term payroll designates the manner in which you will be paying the employees of your company plus even yourself. lots of multinational companies cater to payroll service provider companies that do the work quite efficiently.


These are a quantity of the broad guidelines that will help you grasp the basics of accounting. it is essential to have some such wisdom for accounts as it is fruitful in all walks of life.