Let you understand the six elements of accounting

It's been a while, and everyone is busy. Some people are disappointed in the stock market, and there is no Yaxing to participate in the discussion in the group. Some people are in a hurry to make reports. Therefore, our thematic discussion during this period of time is mainly light. The following article is not for accountants, but for other departments. To do a good job in finance, it must be supported by other departments, so it is necessary to let them understand the conventional accounting theory. In fact, the basic principles and methods of accounting are very simple, but we often complicate simple problems in teaching. So I made up a story to give my colleagues a preliminary understanding of accounting. The opening sentence is very rough, and the rhetoric is not too rigorous, just understand the meaning.

1. Xiao Wang graduated from university and decided to be self-employed. After discussing with his family, he decided to start a small software development company. Starting a company requires start-up capital. Xiao Wang raised 100,000 yuan through the following channels:

a. 50,000 yuan from the family;

b. Students borrow 30,000;

c. Bank loan 20,000.

The above funds are all deposited in the bank, and the relationship between them can be expressed by a balance equation: bank deposit (100000) = household investment 50,000 + bank loan 20,000 + classmates loan 30,000

2

Assets: Bank deposits of 100,000 are resources that Xiao Wang can control to bring economic benefits to himself.

Liabilities: A bank loan of 20,000 and a classmate loan of 30,000 are the obligations of Xiao Wang's future economic benefits.

Owner's equity: The family investment (capital) of 50,000 belongs to Xiao Wang's own equity, which is the difference between assets and liabilities.

3. After the company operates, bank deposits are used for many expenses, and 60,000 yuan is set aside from bank deposits, namely: 30,000 to buy equipment, 20,000 to buy materials, and 10,000 cash to be withdrawn. No matter how it changes, the above identities remain the same. That is: assets 1,000,000 (equipment 30,000 + materials 20,000 + cash 10,000 + bank deposits 40,000) = owner's equity 50,000 + liabilities

50,000 Among them: equipment - the service life is more than one year, the value is large, the liquidity is weak, called "fixed assets"

Materials - once used at one time, the liquidity is strong, called "current assets".

Cash and bank deposits: the most liquid, also called "liquid assets"

The above identity can be expressed as: fixed assets 30,000 + current assets 700,000 = owner's equity 50,000 + liabilities

50,000 4. At the end of the year, Xiao Wang calculated the company's business since its opening, with an income of 50,000 yuan and an expenditure of 20,000 yuan for materials, labor, and rent. Therefore, profit 30,000 = income 50,000 - expenses 20,000. At the same time, on December 31, Xiao Wang found that the company's asset situation has also undergone new changes:

assets = equipment 60,000 + bank deposits 70,000 = 130,000

If Xiao Wang's company's liabilities and owner's equity are still the initial number at this time, how should the identity be expressed? That is: assets 130,000 = liabilities 50,000 + owner's equity 50,000 +?

Obviously, the difference on the right side of the equation is 30,000, that is, the profit realized by Xiao Wang's company, and this part of the profit should be attributed to Xiao Wang's new equity, so that the identity is: assets = liabilities + owners' equity (capital + profits)

expressed in accounting language, that is, assets = liabilities + owners' equity (paid-in capital 50,000 + undistributed profits 30,000).

The principles of accounting and the balance sheet are based on this identity.

5. Assets = liabilities + owner's equity, description: one day, how many assets does Xiao Wang have, how much money he still owes others, and how much capital he has. This reflects Xiao Wang's financial situation.

Profit = income - expenses, indicating how much Xiao Wang has made as of a certain period of time. This reflects Xiao Wang's business results.

In accounting, the above-mentioned items that express financial status and operating results are called "accounting elements", namely: assets, liabilities, owners' equity, income, expenses, and profits.