Assets, Liabilities, Equity, Revenue and Expenses

Assets, Liabilities, Equity, Revenue and Expenses are different accounts in the accounting system.

Assets account: Anything that add value to an entity's worth, fall under this account.

liabilities account: anything that take away value from an entity worth, falls under this account.

Equity account: any contribution of money, or financial equivalent invested by an entity in his worth.

The revenue account: All income generated will be recorded in this account.

Expense account: any financial transactions that occur, as expenditure, in generating that income.

a house can be used as an example that includes all the explained accounts:

Asset: your house has a dollar value attached to it all the time.
Liability: the loan that you took to purchase the house.
Equity: the down payment that you put to purchase the house.
Revenue: If I rent out my house then the income will be my revenue.
Expense: the cost of maintenance, insurance, repair...etc

Accounts

Accounts are basically meant to give a record of business transactions of specific item in the business.

For example, the personal check account is created to give a record of the owner of the account's financial transactions (e.g. depositing money or writing a check)

The General Ledger will contain all sort of accounts related all the items in the business.

The process of posting the financial transactions to a particular account is called journal entries.

Debits and Credits

These are the basic and most important two terms in accounting, they can basically be defined as:
Debit:
is a value added to an account.

Credit
is a value removed from an account

Every transaction that occurs in a business can either be categorised as debit or credit.

Depending on the account that you are handling, you will be clear about classifying the transaction into debit or credit. For example: if you are handling your checking account, a transaction of depositing money into your account is classified as debit, while writing a check for someone is classified as credit.

Introduction

Accountancy is the way of communicating useful financial information about a business entity to some interested parties (shareholders, managers and potential investors) so that they can make wise decision.

The information basically tells the parties about the economics resources under the control of the management of the company and its performance in term of some ratios.

The principles of accountancy are applied to business entities in three divisions of practical art, named accounting, bookkeeping, and auditing.

Accounting is defined by the American Institute of Certified Public Accountants (AICPA) as "the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof."

Today, accounting is called "the language of business" because it is the way for reporting financial information about a business entity to many interested parties.

Management accounting is the type of accounting that provide information to those who are inside the company (insiders), for example: employees, managers, owner-managers and auditors. Management accounting prime objective is to provide information for managers to make management or operating decisions.

Financial accounting is the accounting type that provide information to those who are outside the company, for example: potential shareholders, creditors such as banks or vendors, financial analysts, economists, and government agencies.

The body of rules that governs financial accounting is called Generally Accepted Accounting Principles, or GAAP.