This infographic will help you understand some key relationships in accounting.
The main records are the ledger accounts. These are lists that record similar transactions.
Ledger account types are either assets, liabilities, owners equity, revenue or expenses.
These ledger balances are recorded to keep track of business financial performance.
Relationships between the ledger accounts explain the key financial reports.
Firstly, the Balance Sheet summarises the asset, liability and owner’s equity to determine the financial position of the business.
Secondly, the Income Statement measures profit or loss (or performance) from the revenue and expense figures.
Because accounting study is hard, some say it is like learning a foreign language!
To learn more access these free resources and find the link to the low cost business tutorials.