The three major elements of accounting are: assets, liabilities, and capital.
Assets refer to resources owned and controlled by a business; liabilities refer to economic obligations; and capital refers to what is left for the owners of the business after all obligations are settled.
Revenues and expenses affect capital. Revenues are economic benefits received from conducting business; and expenses are the costs incurred in generating them.
In this series of lessons, we will learn more about the elements of accounting. We will also provide lists of accounts that are commonly used for you to be familiar with the items included under each accounting element.