Understanding Business Financials in Five Boxes

Every single thing your business does fits into just five boxes. First,

you've got Assets: stuff you own that makes you money, like your cash or equipment.

Then, Liabilities: what you owe to others, like a bank loan or unpaid bills.

Your Owner’s Equity is what's actually yours – it's your assets minus your liabilities.

Next is Income, the money you earn from sales, which boosts your equity.

And finally, Expenses, the costs of running the business, like rent,

which reduces your equity. So, assets and liabilities are a snapshot of

your wealth, while income and expenses tell the story of how that wealth changed.