Accounting is the systematic recording, categorization, and summarization of occurrences and

transactions in terms of money.

The three primary financial statements that are used in day-to-day accounting are as follows:

• Income Statement - This document displays a company's profit and loss over a specific period, such
as a fiscal year.

• Balance Sheet - It displays a company's assets and liabilities as of a specific date.

• Cash Flow Statement - As its name implies, this document lists the cash flow associated with a
company's various economic activities during a specific period.

Assets are resources that benefit their owners or resources with an economic value that are under
the control of the entity and are expected to provide value in the future. There are two different
categories of assets: current assets and noncurrent assets. Current assets are those that have been
held for less than a year, and noncurrent assets are those that have been held for a more extended
period, or for longer than a year.

Liabilities are current obligations that need to be paid back now or soon. Additionally, there are two
different categories of liabilities: current and noncurrent. Current liabilities are anticipated to be paid
off within a year, and noncurrent liabilities are expected to be paid off in the long term, that is, over
more than a year.

Equity is the whole of the owner's capital or resource investment plus any profits generated. The
money that the entity earns without any investment from its owners or without assuming any
liability is known as income. Expenses are the money or resources the business uses to generate
income, excluding capital repayment or liabilities.