Accounting is also interpreted as a process of summarizing, analyzing and reporting business financial transactions. What is meant by a transaction, which is an agreement between two parties, where one party sells goods or services, while the other party buys the goods or services. A business transaction must be measured in value in money or in other words, can be expressed in currency. Meanwhile, if you want to hire a professional accountant to help your business, we suggest you hire the best Xero Noosa.
There are categories of records in accounting. There are several main components in accounting, such as:
This is everything that has value and belongs to the company. So, the property is all of the company’s wealth, whether visible or invisible, that has a value of money or can be converted into money and useful for the company in the future.
Liabilities (Obligations or Debt)
Do you know what liabilities are? Liabilities are a company’s obligation to pay a certain amount of money to another party. One source of wealth in a company comes from people who lend (creditors).
The company’s obligations to the owners of capital who invest their capital in the company. Everything that is owned by a company to support the performance and running of a company is classified as capital. So in addition to cash can be a place of business, machinery, computers, and others.
That income is the nominal obtained by a company from the sale of goods or services. Income can also be obtained from rent or interest. If the company rents out the place, it must get money, and it goes into income (rent) or if the company lends money to another party and earns interest, it is also called income (interest). So, there is income derived from business activities, such as trading and selling merchandise, and income outside the business, as mentioned earlier, namely rental income and interest income.
Money spent by companies to finance business operations. Now, this is the opposite of income. Any nominal issued by a company to run a business is called an expense.