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.
Assets are classified into current and non-current assets. Current assets pertain to short-term resources while non-current assets refer to long-term properties. Learn more..
Like assets, liabilities are classified into current and non-current. Current liabilities refer to obligations that are expected to be paid in the near future (within the normal cycle or 1 year). Non-current liabilities refer to long-term obligations. Learn more..
Capital (or equity) is what is left to the owners after all liabilities are paid using the company's assets. In short, capital is equal to assets minus liabilities. In corporations, it is known as stockholders' equity
. Learn more..
Revenues (or income) are economic benefits received from doing business. In this lesson, we will discuss the types of revenues; know and understand what items are reported in the income statement. Learn more..
Expenses are costs incurred in conducting business. In this lesson, you will find a list of common expense accounts. Each account is briefly described for you to know their nature. Learn more..