What are the Elements of Accounting?

WHAT ARE THE ELEMENTS OF ACCOUNTING?

No one can imagine running a business without being familiar with accounting. An Accounts department is always present in a business organization that is responsible for all financial tasks. An accountant sitting in accountant post then must familiar with basic of accounting
                                     In this article, I will discuss five elements of Accounting that every accountant must know.

1. Assets
2. Liabilities
3. Expense
4. Revenue
5. Equity

ASSETS
                      Assets are the resources of a business which keeps by the business for a particular period and which are expected to be beneficial in the future operations of a business. For example, A manufacturing company buys a manufacturing plant for manufacturing its products. This is its assets which purchased for a specific period and will be used to manufacture a product that results in enhancing an organization's income.
Assets are further classified into categories. Some most known are Fixed Assets, Current Assets, Liquid Assets, and Fictitious Assets, etc.


LIABILITIES
                       Liabilities are the things that a business owes to other persons. We can also say that these are outsiders claims against the assets of a business. For Example, If a business takes Loan from Bank, the business is liable to pay it to Bank otherwise Bank can claim their loss by selling your assets.
Basic Elements of Accounting.
EXPENSE
                      Expense is the cost that a business incurred to earn a profit. It is also called the cost of doing business. For example, a business is involved in making some products. To make a product business purchases raw material to start the process. So the cost of material is a business expense.
REVENUE
                      Income earned by incurring expenses is called revenue.
                                                                OR
                                Amount received on the sale of goods manufactured.
In the above example business purchase raw material. Now the Material is put into work in process and in the end, a finished product will prepare. The business sold that product and earn its revenue. The difference between the cost of the product manufactured and the sale price is business profit.
EQUITY
                       " Owners Claims against the assets of the business"
                        The amount owner put in business to commence its business is called equity(often Called Capital). In all kind of businesses( Sole tradership, Partnership, JSC) it's the owner that put their money to start businesses. Basic Accounting formula for owner equity is;
                                        Owners Equity = Assets - Liabilities