every business transaction leaves the accounting equation in balance.

industry, sunrise, fog @ Pixabay

I don’t know that there’s a self-awareness level that every business transaction leaves. You might think every transaction is done perfectly on your end, yet you’re still not even close to being able to count on your own account. You might be able to count on your sales tax return, yet you still don’t have a solid number to tell you how well your business is doing.

Sure, as a business owner you may feel the need to take this into account. This is why it’s so important to make sure you keep an honest accounting of your money at all times.

This is a true statement. As a business owner, it is your job to take care of the books. You have to be able to balance the cost with the profit, which in turn means you have to take care of the accounting side of things.

Yes, that is true. It is so true that some people are better at taking the time to examine the accounting side of things before they even begin a transaction. While we are all accountable to our vendors and ourselves, we all want to pay them back as soon as possible. It isn’t always that easy.

Yes, accounting is a balancing act, and it is indeed important to understand the math involved in all transactions. However, just because accounting is a balancing act doesn’t mean you should feel bad if your calculations get off track. On the contrary, it is important to take the time to analyze the math behind a situation, and you should be able to explain your results to a friend who is struggling with the same business problem.

What’s not understood, however, is that the accounting equation isn’t an equation at all. The equation is your mental model of the entire universe, the entire world, that you live in. The accounting equation is the mental model of how you think things are.

What’s not understood, however, is that the accounting equation isn’t an equation at all. The equation is your mental model of the entire universe, the entire world, that you live in. The accounting equation is the mental model of how you think things are.The accounting equation is a simple mental model that shows you the financial status of every aspect of your business. If its income, expenses, and cash, then its balance sheet, and its balance with you.

What’s not understood, however, is that the accounting equation isn’t an equation at all. The equation is your mental model of the entire universe, the entire world, that you live in. The accounting equation is the mental model of how you think things are.The accounting equation is a simple mental model that shows you the financial status of every aspect of your business. If its income, expenses, and cash, then its balance sheet, and its balance with you.So if your business is running a tight ship, then you would be one of the very few businesses in the universe that would make money. And thats because its the very essence of the universe to balance its financial equations. All of the business transactions of the universe need to balance out to make it all work.

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