If you understand the definition and goals of an accounting system , you are ready to learn the following accounting concepts and definitions. Things of value held by the business. Assets are balance sheet accounts. Examples of assets are cash, accounts receivable, and furniture and fixtures. What your business owes creditors.
Liabilities are balance sheet accounts.
Examples are accounts payable, payroll taxes payable, and loans payable. The net worth of your company. Also called owner's equity or capital. Equity comes from investment in the business by the owners, plus accumulated net profits of the business that have not been paid out to the owners. It essentially represents amounts owed to the owners.