What do assets, liabilities, income and expenses actually mean? Start with the building blocks of accounting and see how they fit together in everyday business.
The purpose of your books
Accounting records the financial activity of a business. Clear records help you see what you own, what you owe, how much you earn and where your money goes.
The five building blocks
Assets are resources the business owns. Liabilities are amounts it owes. Capital represents the owner’s interest. Income records earnings, while expenses record the costs of running the business.
Start with a consistent routine
Keep invoices and receipts, record transactions regularly, and reconcile your bank statement with your books. A small, consistent routine makes the accounts easier to review.
This sample guide is for learning and general reference. Check current applicable provisions and consult a qualified adviser before making tax or compliance decisions.
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