PERFECT BALANCE BOOKKEEPING

HOW TO UNDERSTAND WHAT’S CONFUSING

ASSET = LIABILITIES + OWNER EQUITY

WHAT ARE ASSETS

• CASH•ACCOUNTS RECEIVABLE• INVENTORY• FIXED ASSETS

WHAT YOU OWN

WHAT ARE LIABILITIES

WHAT IS OWNER EQUITY

WHERE DOES INCOME AND EXPENSE FIT INTO THE ACCOUNT EQUATION

ASSETS INCOME

WHERE DOES INCOME AND EXPENSE FIT INTO THE ACCOUNT EQUATION

LIABILITIES EXPENSE

Now that you know the difference. Let’s put the pieces

together

Every transaction has two sidesSALE

BANK ACCOUNT

CASH

ASSET INCOME

CREDITACCOUNT RECEIVABLE

Every transaction has two sidesPURCHASE

BANK ACCOUNT

CASH

ASSET LIABILITY

CREDIT

ACCOUNT PAYABLE

REVIEW

BALANCE SHEETASSETS• CASH • ACCOUNT RECEIVABLE• INVENTORY• FIXED ASSETSLIABILITIES• ACCOUNTS PAYABLESEQUITY

INCOME STATEMENT• INCOME/REVENUE

• EXPENSE/PURCHASES

THE PIECES MAKES THE EQUATION BALANCE

PERFECT BALANCE BOOKKEEPING