Accounting is how businesses keep track of how much money they are making and how much money they have spent. You might think it sounds boring, but knowing how accounting works will give you a better understanding of the business world. In this blog post, we’ll look at 11 simple principles that every business owner should know!

The 11 principles of accounting are how businesses keep track what is coming in and what is going out. You might think it sounds boring, but knowing how accounting works will give you a better understanding of the business world–and not only that, it’ll help your company stay on top of its finances! So let’s get into how it works!

This is how accounting works:

There are three primary accounting reports which tell you practically everything about the business:

1. The balance sheet, which lists how much a business has in assets, liabilities, and equity. It also shows how the company’s debt compares to its assets.

2. The income statement (Profit & Loss), which tells you how much money was made or lost over a certain period

3. The cash flow statement, which details how funds are coming in and how they are being spent.

Businesses need to follow the accrual accounting system, which means that income is counted when it’s earned (even if you don’t receive payment for a while), and expenses are estimated when incurred (even if you don’t pay them yet).

A company should also keep track of how much money is owed to them, how many debts they owe, and how much it owes in taxes.

The general rule for accounting is that if something happened today, then it should be counted as a business expense or income for the current day only-not next week just because you’re getting paid this Friday!

One of the most important things to understand about how accounting works is that it’s all based on particular principles. 

There are eleven simple principles every business owner should know:

1. The balance sheet lists how much a business has in assets, liabilities, and equity. It also shows how the company’s debt compares to its worth.
2. The income statement tells you how much money was made or lost over a certain period.
3. The cash flow statement details how funds are coming in and how they’re being spent.
4. Businesses need to follow the accrual accounting system, which means that income is counted when it’s earned (even if you don’t receive payment for a while), and expenses are estimated when incurred (even if you don’t pay them yet).
5. A company should also keep track of how much money is owed to it, how many debts the business owes, and how much it owes in taxes.
6. The general rule for accounting is that if something happened today, then it should be counted as a business expense or income for the current day only–not next week just because you’re getting paid this Friday.
7. The accounting equation is how businesses can keep track of how much money they’ve made, how much money they owe and how to balance these numbers out to cover their expenses.
8. A company’s assets are how much it owns–think of how much cash a company has, how many bills they’ve paid, and how much they hold in the property.
9. Liabilities are debts that the business owes to somebody else (like how fast you owe your car payments).
10. Equity is how the company’s value compares to what it owes. For example, how much is the company worth if all its assets were sold and how much it owes.
11. This equation can also be written as Assets – Liabilities = Equity (or what’s leftover).

In accounting, equity isn’t just how a business compares to what it owns–it’s how profitable it is!