Students and entrepreneurs understand that accounting skills are important for the financial well-being of any business. But often wonder how easy it is to learn accounting by yourself.
In business it is important to have a knowledge of accounting. This is true if you are looking to manage your books as a business owner or if you are looking to further your employment opportunities.
Staying up to date with these skills can be challenging as the industry is always changing. The internet offers many ways to develop new skills. Home-based courses and tuition make learning accounting easy and these classes can be taken at home.
How to learn basic accounting
If you are doing the books for your business or are looking to make the books for another professional you need some basic accounting skills to get things going.
What is accounting?
Accounting is the production of financial information for a business.
This allows the business to see how much money they are making, to see how much the company is worth, and to see where the money is being spent.
This will allow the business to make the needed changes to turn around a greater profit.
There are many reasons why accounting is important. If you are working in a business you need to know if you are making money and how much money you are making.
You also need to have this information available for other financial professionals.
Assets and Liabilities in Accounting
Assets are the resources that will help make the business profitable. You will have some of the control over this.
To be an asset the following requirements must be met:
- You need to have control over it
- You have control over the past results
- There are economic benefits in the future
Liability is the obligation that the business has to meet. In simple terms liability is credit.
To be a liability the following must be met:
- It has to be a business obligation
- The obligation is from past events
- Fulfilling this obligation will need to use business resources
What is the Accounting Equation?
The accounting equation is based on double-entry accounting which states that every transaction has a debit and a credit.
For every debit, there is an equal and opposite credit. This can be kept track of on a balance sheet which is also called the Balance Sheet Equation.
Assets = Liabilities + Owners Equity
Owner equity can be thought of as the amount of money that the owner has invested in the business.
When you add personal assets into the business the owner’s equity is going to increase. This can be in the form of cars, cash, and other equipment for the business.
How does the Accounting Equation Work?
Every transaction that occurs will be recorded with the accounting equation.
Three things are important to remember when thinking of this:
- The left side is the debit side.
- The right side is the credit side.
- Every equation has to be balanced.
Thus we have two sides of the accounting equation.
This side is on the left of the equation. It will be composed of the assets.
This is the right side. This is the liabilities and owners’ equity.
Both sides of the equation always need to be balanced.
What is Revenue, Expense & Drawing in Accounting?
Revenue in Accounting
Revenue is the money that a business makes off of their activities.
It can also be called turnover.
Not all of the money that your business takes in is revenue. Revenue is the money made from selling a good or service.
Expenses in Accounting
Expenses is the money needed to run the business. It is the cost of operations.
- Purchasing a car is not an expense but it is a business asset. This is called capital expenditure.
- The fuel used in the car and the insurance costs are expenses. This is called revenue expenditure.
Capital expenditures are purchases that will last for more than a year. The revenue expenditure is the items that will last for less than a year.
Drawing in Accounting
Owners will need to put money back into their business occasionally. They can also take money out of the business.
Drawing is only used in an owner-operated business. Large companies often do not deal with these issues since the owner is not involved in daily operations.
Studying Accounting from Home
There are a number of ways that you can learn accounting at home by yourself.
Whether you take an online course with a certificate or you consume videos posted by professionals, you can learn the skills you need.
You will learn how to spend, invest, and use money properly within your business.
You will also learn some basic techniques so you can determine if you are making money and where changes need to be made to make a higher profit.
1. Take Free College Classes Online
These classes will not require a fee and you can take them while sitting at home.
Many Universities offer free classes and some may even include exams and study materials.
2. Khan Academy
This online school is also free. This program has classes for almost anything and there are educational videos and exercises where you can learn and practice new skills.
This online school has business courses and different class options. There are accounting courses and auditing the course will be free. You can get access to all of the materials offered in the course.
If you want the classwork you turn in graded you will need to pay. You will then get a certificate for completion from this course.
4. Learn from Youtube
You can learn accounting by watching videos on Youtube. Many accounting professionals have posted videos covering the basics and advanced learning. Most videos are as enjoyable to watch as they are informative.
We have created a page collecting the best accounting Youtube channels here.
5. Get a Book
There are many books on accounting on the market. If you check the best selling book then you can be engaged and entertained while you learn.
You will need to do some more than just read the book though. You will need to learn the vocabulary and put the things that you have read to practice.
If you want to learn accounting by yourself there are a number of options available for learning at home.
Are you an entrepreneur? Thinking of starting your own business? Read more about learning accounting skills as a business owner to help your business grow.