Business and Accounting Basics

When you ask students to tell the difference between their needs and wants, the answers are surprising. They say that they cannot live without their cell phones, a car, the latest outfits, a bed, cheesy pizza and of course, money. These are considered needs and the wants become a fuzzy …

For every transaction made in a business, you must record a debit entry and a credit entry in the ledger accounts. This rule is called the double entry system. The debit entry goes on the left side of one T account and it must have the same amount as the …

Accruals are monies owed either by the business or to the business. This happens when the business does not pay cash for expenses incurred within the accounting period or when cash is not received for income earned within the accounting period. The accrual/matching concept is the principle that states expenses …

The Balance Sheet is the next step in the Accounting Cycle after the Income Statement is completed. It is one of 3 financial statements that is prepared by an accountant. The other 2 are Income Statement and Cash Flow Statement. It reports the assets, liabilities, and capital of a business. The …

Goods for resale are the products that a business either produces or buys in bulk to sell for the purpose of making a profit. The cost of producing or buying these goods must be cheaper than the selling price that a business sets in order to make a profit. Even …