What the business is worth to the owner. The Owner's Equity is determined by adding up all the assets and subtracting all the liabilities. If the owners sold all their assets and paid-off all their bills, they would have the right to keep the money that is left over. See the Balance Sheet section below. Although the Balance Sheet does not itemize all the income and expenses a business had, it will show if the business made a profit or had a loss at the end of the specific period.
Expenses occur in the normal operation of every business every day.
It is the accountant's job to provide the owner with a summary of the expenses at the end of each business period. In this way, the owner is kept informed so he can take action if any business expense appears to be unusual or more costly than necessary. The types of revenue a business has depends on the business activities it conducts. A lawyer would derive most of his revenue from client fees, a doctor would get his revenue from patient fees, and a hardware store would receive its revenue from sales. Profit And Loss How much revenue the business is generating and how much money the business is spending is extremely important to the business manager.