| It doesn't matter how much product you sell; if you cannot balance revenues and expenses, maintain adequate cash flow, or have a solid system of collections, your business will struggle if not fail. This is "back room" information that every entrepreneur must consider before getting started. |
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Accounting Equation
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Businesses
always keep records of assets and liabilities as a means of
measuring their true wealth. What's left after liabilities (bills,
debts, creditor claims) are satisfied is what belongs to the owner.
That's known as equity. The accounting equation seeks to balance the
relationship among assets, liabilities, and equity.
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