In Part 1 of this series, we discussed basic accounting concepts like the Accounting Equation. From there we identified the different Account categories and how transactions are placed under Debits or Credits.
You may be thinking, “Ok good, I get why this is being used by companies and banks, but this does not apply to me!“. Perhaps you may be right, but have you asked yourself these questions before?
- How much did I receive as salary this year?
- How does it compare to my earnings from my side business?
- I have been paying my car loan for quite some time now. How much did I pay for it so far and what is left to pay?
- Considering everything including non-cash assets, what is my net worth?
These questions are easily answered if you are recording everything using a double-entry system.