To understand the basics of
accounting, it is important to look at its
three main components and the
terminology related to these
components.Recorded on the
right side of a company's balance
sheet, liabilities include any payable
amounts, loans, mortgages, earned
premiums, deferred revenues and
.accrued expenses
Equity also known as shareholder's
equity refers to the amount of money
that a company must return to its
shareholders after all of its assets are
liquidated and all of its debt is paid off.Examples of a company's assets
include investments, cash, inventory,
accounts receivable, land, supplies,
equipment, buildings and vehicles
Liabilities refer to the legal financial
obligations or debts that companies
incur during business operations.Equity is calculated by subtracting a
company's total assets to its total
liabilities
Expenses refer to the costs of
operations that businesses incur to
generate revenue.