There are 4 elements of the financing of the assets, liabilities, revenues and costs. Everything in your world falls under these 4 categories. Each of these categories is subdivided into accounts – and that is simply a means of monitoring activities. For example, a “control” is a well preserved in the bank and a log of deposits and withdrawals asset.Assets things of your own value. Things such as your home, a portfolio of shares, a mortgage that you collect on an account of the IRA were active. The value of your assets in May upwards or downwards, but they are still active. The best asset is income-producing assets of these assets a regular income for you.
Liabilities are debts. Usually, these are the result of someone else, it gives you one of their assets in the hope that you to them. For example, a mortgage that you pay (your responsibility) of the money from the lender has (assets) and they gave it to you can buy your house (your assets). The lender wants them and they want interest (income, your expense) with its
Revenue is the value derived from something you’ve made (pay) or any of your assets (rent or interest). Most income in the form of money, but it could be in the form of credit. It is actually an asset, if such income is an idea of the money in an asset account.
The expenditure value that you spend. This value is usually in the form of money and is either an account of income, an asset account or add it to a liability account.
Suppose you are in a room with 4 walls – each wall is filled with small boxes. Each wall is one of the 4 elements, and each mailbox is an account. When the mailbox called “wage” on the wall and pull the income from your gross salary, you need to use part of the money in a box labeled “taxes” on the wall charges and the rest can go in a box labeled “Control Account” on the wall of assets. Every check you write for money from the “Control Account” mailbox on the wall of the assets and save money in a mailbox on one of the 4 walls. I heard this metaphor Mike Butler