I graduated in Business school and I know Basic Accounting so important in our daily life. We just don't know but we use accounting everyday- the money comes in and money that goes out. Basically you don't need to graduate in Business school to understand all of the accounting cycle. Of course it is well worth once you are there and have a better understanding about the subject. It's all different stories once you study the accounting or wants to be an accountant.
There are only 3 words you should understand and how to manage your finances. Most of us screw up with these words.
- Asset- is an economic resources or whatever you own like a private property, one of the standard examples are cash, furnitures, homes, clothes,car and land. Remember all these assets my depreciate the value if you think a long term.
- Liability-is responsible for something. This is your debt and you have responsibility to pay in a short term or long term. One of the example is your house mortgage, car mortgage and your credit card.
- Income-is your monthly wages or salary.
Most people screw up with these 3 words and sometime they think liability is there asset and they forget about their income and that's we called a compulsive buyer. Some people forget that asset would depreciate and never think the long term.
