wiki/2020-11-15-05-10-51.org

#+title: Accounting basics
#+author: "Gabriel Arazas"
#+email: "%![Error: (void-function user-mail-address)]"
#+date: "2020-11-15 05:10:51 +08:00"
#+date_modified: "2020-11-15 05:11:23 +08:00"
#+language: en
#+options: toc:t
#+property: header-args  :exports both


Accounting is knowing how much we have.
Bookkeeping is the practice of tracking and classifying various financial moves.

Bookkeeping can make financial management less stressful (and some might say, enjoyable).
You can easily know what you have: disposable income, loans, credits, etc.
On the other hand, it is also legally required for business to keep track of it.

In accounting, the basic unit of operations are *transactions*.
Transactions are seen everywhere — you've done a transaction when you've bought your laptop, ordered some food, delivered a package, etc.

To make a transaction, an *account* is used as a marker or label for the two sides.
For example, a transaction for buying a laptop with cash is made of two accounts for the cash and the laptop.

In personal financing, there are said five common accounts:

- Assets which are composed of your bank account, wallet, real estate, and investments.
- Liabilities which is something you owe (e.g., mortgages, loans).
- Income, another term for revenue, is your paychecks, received gifts, and interests.
- Expenses including groceries and bills, given gifts, and donations.
- Equity is everything else.

Each transaction is made up of two components usually referred as *debit* and *credits*.