Understanding the 4 sides of Finance
There are 4 components of financing: assets, liabilities, revenues and costs. Everything in your financial world is in these 4 categories. Each of these categories are subdivided into accounts – each of which only some form of control activities. For example, a “current account” is a well-guarded with the bank and a list of deposits and withdrawals from such activities.
Activities are things of value that you own. Things like home, a portfolio, a mortgage, based on an IRA, all activities. The value of its assets can be enlarged or reduced, but still active. The best kind of activity is the production of capital income, as these activities are a regular income for you.
Liabilities are debts. In general, these are the result of another person who is one of their products, hoping to return to them. For example, a loan that is in (their responsibility), he was the money (wealth), and gave it to you to find the house (right). The lender wants the property and the interests want (income, expenses), with
The result is the value of something you have (wages) or one of its assets (rent or interest). The bulk of revenues in the form of money, but you can take the form of loans. The loan is a very good, because this type of income has proved to be an “idea of money in a deposit account.
The cost is the value you spend. This value is usually in the form of money and comes from a consideration of an income or an asset to a liability.
Imagine you are in a room with 4 walls – a wall full of small boxes. Each wall is one of 4 components, and each mailbox is an account. When you open the mailbox as a “salary” income to the wall and disconnected from its gross operating payBusiness article, you need money in a box called “tax” on the wall of the expenses and the remainder can be used in a call “account verification” in the active wall.
