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The Accounting Model - Accounting s Rosetta Stone
Financial statements consist of a Balance Sheet and Profit & Loss Statement. These two reports act as a Â"containerÂ" for all your business transactions. Each transaction is recorded according to a set of rules called Â"The Accounting ModelÂ".
The Accounting Model is made up of three very simple parts:
The first part is a ledger page with a line drawn down the middle (like a big T) automatically creating a left and right side of the dividing line. However, in accounting language the word Â"debitÂ" is used instead of Â"leftÂ" and the word Â"creditÂ" is used instead of Â"rightÂ". The trick here is to not make this anymore complicated than it really is. DonÂ't try t...
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