Article: The Accounting Model - Accounting's Rosetta Stone
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The Accounting Model - Accounting's Rosetta Stone
As a small business owner/manager you must have an understanding of the financial end of your business. Certainly, you have a decent grasp of how the business operates, but are you able to visualize an accounting framework that your transactions fit into? To do this requires becoming familiar with how your financial statements are structured and knowing the rules for recording transactions.
Financial statements consist of a Balance Sheet and Profit & Loss Statement. These two reports act as a ?container? for all your business transactions. Each transaction is recorded according to a set of rules called ?The Accounting Model?.
The Accounting Model is made up of three very simple parts:
The first part is a ledger page with a line drawn down the mi...
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