Again, the equation holds true. Thirdly, we could have raised more capital. In this case Assets increase and Owner s Equity increases. We will look at a couple of other options after the next section. Let us now consider the accounts we must keep to help us calculate our profit.
Revenues Are inflows or other enhancements, or savings of outflows.
When we sell goods or services the amount paid or owing to us represents a revenue. It is not necessary for cash to have changed hands for a revenue to be recognised. Expenses Are consumptions or losses of service potential or future economic benefits, The cost of any goods that we have sold is an expense. Monies paid or owing on our phone bill, rent or electricity bill are also expenses. We will examine this formulation of the equation later in the course.