Basic Accounting Knowledge: Accounting Elements

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Assets consist of fixed assets and current assets.

Liabilities consist of current liabilities and long-term liabilities.

Owners' equity consists of paid in capital and surplus reserves.

Income is composed of main business income and extra business income.

The cost is from manufacturing expenses and operating expenses.

Profits consist of items deducted from operating expenses after expenses.

Assets = Liabilities + owners' equity;

Owner equity = capital +

Profit = income - cost;

Assets + expenses (cost) = Liabilities + capital + income;

Balance of asset class + cost class balance = Liabilities class balance + owner equity class balance + profit and loss account balance.