Financial Freedom: Understanding Business Funding

Seeking funding leverage is grounds for understanding business funding and the accounting equation. Two of the most critical issues to make money online . If you you have good business ethics and are working from home to generate extra income, take it to heart that accurate accounting is at the literal heart of a profitable business.

Funding Note: Capitalism is a great vehicle for unmasking super wealth in this country. But there are also inherent risks. More than ever we are hard pressed to recession proof our investments against any financial crisis.  Also know that out of all recessions come good opportunities to become super wealthy.                             

When you are skilled in accounting it is only a matter of time until you receive the funding you seek. Accuracy is the crux of your business as it pertains to all business transactions.

Accounting is the art of the system of recording and summarizing business and financial transactions and analyzing, verifying, and reporting the results.

Funding accounting is one branch of accounting and historically has involved processes by which financial information about a business is recorded, classified, summarized, interpreted, and communicated; for public companies, this information is generally publicly-accessible.

Tax Accounting is the accounting needed to comply with jurisdictional tax regulations.

Financial Freedom- Double-entry Bookkeeping System
The basic accounting equation is the foundation for the double-entry bookkeeping system. It shows how assets were financed: either by borrowing money from someone (liability) or by paying your own money (shareholders' equity).

This system is called double-entry because each transaction is recorded (posted) in at least two accounts. Each transaction results in at least one account being debited and at least one account being credited, with the total debits of the transaction equal to the total credits.

For example, if Business A sells an item to Business B and Business B pays Business A by check, the bookkeeper of the Business A would credit the
account called "Sales" and debit the account called "Bank".

Conversely, the bookkeeper of Business B would debit the account called "Purchases" and credit the account called "Bank".

The general ledger, sometimes known as the nominal ledger, is the main accounting record of a business which uses double-entry bookkeeping (as above).

It will usually include accounts for such items as current assets, fixed assets, liabilities, revenue and expense items, gains and losses.

Financial Freedom - General Ledger Accounts

Financial Freedom- General Ledger
The general ledger is a collection of the group of accounts that supports the items shown in the major financial statements.

It is built up by posting transactions recorded in the general journal. The general ledger can be supported by one or more subsidiary ledgers that provide details for accounts in the general ledger.

For instance, an accounts receivable subsidiary ledger would contain a separate account for each credit customer, tracking that customer's balance separately.

This subsidiary ledger would then be totaled and compared with its controlling account (in this case, Accounts Receivable) to ensure accuracy as part of the process of preparing a trial balance.

There are seven basic categories in which all accounts are grouped:

1. Assets
2. Liability
3. Owner's equity
4. Revenue
5. Expense
6. Gains
7. Losses

The balance sheet and the income statement are both derived from the general ledger. Each account in the general ledger consists of one or more pages.

The general ledger is where posting to the accounts occurs. Posting is the process of recording amounts as credits, (right side), and amounts as debits, (left side), in the pages of the general ledger. Additional columns to the right hold a running activity total (similar to a checkbook).

The listing of the account names is called the chart of accounts. The extraction of account balances is called a trial balance. The purpose of the trial balance is, at a preliminary stage of the financial statement preparation process, to ensure the equality of the total debits and credits.

The general ledger should include the date, description and balance or total amount for each account. It is usually divided into at least seven main categories.

These categories generally include assets, liabilities, owner's equity, revenue, expenses, gains and losses. The main categories of the general
ledger may be further subdivided into subledgers to include additional details of such accounts as cash, accounts receivable, accounts payable, etc.

Because each bookkeeping entry debits one account and credits another account in an equal amounts, the double-entry bookkeeping system helps ensure that the general ledger is always in balance, thus maintaining the accounting equation:

  Assets = Liabilities + (Shareholders or Owners equity)

  Assets - Liabilities = (Shareholders or Owners equity)


For example, say a student buys a computer for $945. This student borrowed $500 from his best friend and saved another $445 from his part-time job.

Now his assets are worth $945, liabilities are $500, and equity $445.

Now it shows owner's interest is equal to property (assets) minus debts (liabilities). Since in a company owners are shareholders, owner's interest is called shareholder's equity. Every accounting transaction affects at least one element of the equation, but always balances.

Searching for financial freedom in a home business, cashflow is the name of the game and making money online (business revenue) is the other side of the business financing coin. 

The very best way to fund a business is using other peoples' money not your own; that kind of infusion of capital is business financing leverage squared.

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Page References

Business Sales Pathfinder

Business Action Guide

Make Your Price Sell

Geometric Progression

Options By Choice

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