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Assets and expenses are two accounting terms that new business owners often confuse. Here’s what each term means and how to use them in accounting. Assets vs. Expenses: Understanding the Difference
An expense decreases assets or increases liabilities. Typical business expenses include salaries, utilities, depreciation of capital assets, and interest expense for loans. The purchase of a capital asset such as a building or equipment is not an expense.
Robert Kiyosaki, the founder of the "Rich Dad, Poor Dad" empire, says that there are six basic words that are key to financial literacy and education: income, expense, asset, liability and cash ...
An expense account is the right to reimbursement of money spent by employees for work-related purposes. [1] Some common expense accounts are Cost of sales, utilities expense, discount allowed, cleaning expense, depreciation expense, delivery expense, income tax expense, insurance expense, interest expense, advertising expense, promotion expense, repairs expense, maintenance expense, rent ...
The general accounting equation is as follows: Assets = Equity + Liabilities, [22] A = E + L. The equation thus becomes A – L – E = 0 (zero). When the total debits equals the total credits for each account, then the equation balances. The extended accounting equation is as follows: Assets + Expenses = Equity/Capital + Liabilities + Income,
Subtract your assets from your liabilities Say you have a total of $800,000 in assets and $300,000 in liabilities. Your net worth would be $800,000 less $300,000 — or $500,000.
Wages and salaries in cash consist of such amounts payable at regular intervals, such as weekly, monthly or other intervals, including payments by results and piecework payments; plus allowances, such as those for working overtime; plus amounts paid to employees away from work for short periods (e.g., on holiday, sick leave, etc.); plus ad hoc ...
Net worth is simply defined as all of your assets minus all of your liabilities. So, let’s say you own a car worth $10,000, a checking account with $1,000 in it and a savings account with $5,000 ...