What is Accountable?
Accounting is the science that aims to study the quantitative and qualitative variations occurred in the assets (set of assets, rights and obligations) of the entities (any natural or legal person that owns an asset).
Through it, the most useful information is provided for decision making, both inside and outside the company, studying, recording and controlling assets.
In summary, Accounting covers a set of techniques to control the assets of organizations through the application of its own set of principles, techniques, rules and procedures, measuring, interpreting and informing the accounting facts to the owners of the companies.
Its purpose is to record facts and produce information that enable the owner of the property to control (make sure that the organization is acting in accordance with the plans and policies outlined) and planning (deciding which course to take to achieve it more quickly, efficiently and proposed objective) of how to act on its assets.
What is an asset or liability in accounting?
Assets and Liabilities are fundamental numbers for the accounting of a company, besides being also useful in the management of the organization. This is because they reflect your equity situation and help with current and future financial analyzes.
In general, a company's accounting operations can be classified into assets, liabilities, income and expenses. Thus, each movement carried out is named and organized.
Assets are the accounts that contain the registration of assets, credits and property rights of a company. They can include inventory numbers (whether of finished products or raw materials), goods (such as equipment and real estate) and also financial assets, such as investments or accounts receivable.
ASSETS can also cover assets. For example, the company's silk, if it is its own property, can be counted as an asset. In addition, real estate funds, consortia and investments that aim to add to the organization's equity can be counted as equity.
All of these are considered assets that the company owns.
Liabilities are the numbers that record the company's debts and obligations to third parties, whether they are business partners, banks or the government. Payment of suppliers, loans, financing and tax and social obligations are examples of liabilities.
They represent the items that generate costs for the company, be they maintenance or general expenses, such as debts, employee salaries, electricity, water, among others. Liabilities are usually long-term records, that is, commitments that are assumed for a longer period of time.
Liabilities also include shareholders' equity, which is the result of assets less liabilities. It is, in fact, a positive result. However, it must be included among the liability obligations, as it is an obligation that the company has when launching accounts with the partners.
Why is it important not to have debts?
In our society, it is normal to have debts. Generally, debts are used to leverage consumption power and to anticipate the consumption of goods or services that we do not yet have money to acquire. Most people are unable to postpone their desires and use debt as a lever for life. But I would like to show you why it is important not to have debts, or to have as little as possible.
Below are the main benefits of not having debt.
Freedom
Having no debt brings freedom. If you have no debt, you can more easily quit a job you do not like and even switch to a job that pays less but makes you more fulfilled.
When you have debts, you need to swallow some frogs, since you need to honor the payments.
Smaller emergency reserve
The emergency reserve is most often calculated on the basis of expenses. Generally the value is 6 to 12 times the monthly expenses.
If you have a debt of $ 1,000.00 and have an emergency reserve of 6 months, you need $ 6,000.00 more in comparison if you did not have the same debt.
Tranquility
The tranquility comes from not seeing that giant booklet or knowing that it is in parcel 10 of 320. In addition to the tranquility of knowing that if something happens to work, for example, being fired, it is easier to survive when you have no debts.
Have more money left
The less you spend, the more you can save and invest with. Having no debt is allowing me to contribute more than 50% of my net salary.
Faster financial independence is achieved
Financial independence is a factor in your expenses. The lower the expenses, the lower the amount you will need to save and invest for your financial independence.
A thumb rule to find out how much it takes to be financially independent is to multiply your monthly expenses by 300. This will give you the necessary amount (it is a thumb rule, so there are limitations).
For example, if you have a total expense of $ 1,800.00 per month, you will need $ 540,000 ($ 1,800 x 300).
How can you avoid debt?
- Write down everything
To keep track of your accounts, remember to write down all expenses. This way, you will know exactly where your money is going. Another point is not to get lost in the middle of several payments that need to be made. Example:Date Expenditure Value in $ 3-June-2021 Food 158,24 8-June-2021 Ice-cream 15,00 9-June-2021 Food 117,26 14-June-2021 Food 58,39 20-June-2021 Food 69,72 23-June-2021 Food 148,12 27-June-2021 Food 67,26 30-June-2021 Food 54,23 28-June-2021 Tithe 300,00 28-June-2021 Gift 50,00 28-June-2021 Energy 96,25 28-June-2021 Water 51,73 28-June-2021 Mineral water 16,00 28-June-2021 Gas 20,00 28-June-2021 Telephone 50,56 28-June-2021 Mobile 45,76 28-June-2021 Rent 400,00 28-June-2021 School 236,20 28-June-2021 Books, Enrollment 100,00 28-June-2021 Home maintenance 50,00 28-June-2021 Home Tax 80,00 28-June-2021 Road tax 75,00 28-June-2021 Car maintenance 60,00 28-June-2021 Petrol 150,00 28-June-2021 Birthdays 30,00 28-June-2021 Holidays 100,00 28-June-2021 Clothing 80,00 28-June-2021 Shoes 55,00 28-June-2021 Health insurance 200,00 28-June-2021 Car insurance 15,00 28-June-2021 Miscellaneous 50,28 28-June-2021 Total 3000,00 - Set Goals
One of your goals for 2026 could be to be debt-free before the end of the year. With that goal in mind, you can prioritize your debts and create strategies, such as paying off the most expensive bills in the first half. You can also break down your goals month by month and take it one step at a time. - Organize Your Budget
A fundamental step to getting out of debt is to organize your budget. You can use a mobile app, a computer spreadsheet, or even a notepad. The important thing is to write down all the money you receive each month and all your expenses.
Income could include salary, bonuses, retirement income, bill payments, etc. Expenses should be itemized so you can cut back on unnecessary spending. - Talk to Your Family
It is very important to involve the whole family in creating a budget and in the debt-free process. Each member of your household can help with ideas to reduce your bills or earn more money, whether by working extra jobs or selling items you no longer use. Cut unnecessary expenses. While you're in debt, it becomes difficult to realize bigger dreams. Therefore, for a period of time, it will be necessary to tighten your belt and reduce some expenses. Remember small savings, such as: Turning off the room lights when you leave; Putting the shower on summer mode during hot weather; Adding clothes to the washing machine to use its maximum capacity. Research and compare before you buy. This is advice that works for all consumers, but for those in debt, it's essential! Researching before buying any product guarantees you'll find the best price and, of course, save money. Even if you are looking for a loan to pay off debt, you still need to do your research.
What does the Bible say about accounting? It was verified in biblical accounts of accounting controls, one of which Jesus reported in Luke chapter 16, verses 1-7: the steward who defrauded his master by changing the records of amounts owed by debtors. In Joseph's time, in Egypt, there was such an accumulation of wealth that they lost track of what they had! (Genesis 41:49).
There was a very rich man named Job, whose inheritance was detailed in the book of Job, chapter 1, verse 3. After losing everything, he regained his assets, and a new inventory is presented in Job, chapter 42, verse 12.Solomon's possessions and rents were also inventoried in 1 Kings 4:22-26 and 10:14-17.
In another parable of Jesus, there is a quote from a builder who calculates to see if what he had was enough to build a tower (Luke 14:28-30).
However, he tells the story of a debtor who was forgiven his recorded debt (Matthew 18:23-27).Such accounts demonstrate that, in biblical times, asset tracking was a common practice.
Job had a list of his assets, and this shows a careful approach to the control of his personal possessions. For spiritual reasons, one day Job loses all his fortune, becoming a destitute man. But at the end of the Book of Job, something surprising happens. Also for spiritual reasons, he recovers his fortune and finds an accountant who, at a certain point, presents a surprising report: his wealth had doubled compared to the first inventory: "So the Lord blessed the latter part of Job's life more than the former part, for he had fourteen thousand sheep, six thousand camels, a thousand yoke of oxen, and a thousand donkeys." These and several other examples show that accounting already existed in the earliest societies, even though knowledge of mathematics, writing, business, and even wealth was limited.