Financial Freedom: Understanding Business Funding

Seeking funding leverage is the grounds for understanding business funding and the accounting equation. Being frugal is job number one and making every dollar you spend more than their monetary value.

What is the road to financial freedom? Everyone dreams of it and anyone would welcome the opportunity to make money at home, but you cannot expect to win it early in life by relying on the conventional saving wisdom or the conventional investing wisdom or the conventional wisdom about how to advance in your career. It is all about your attitude towards money and your aptitude to make money. While pursuing your dreams and educating yourself about how to not fall into the “get rich quick” (GRQ) traps.

 Before you attempt to find the courage within yourself to achieve financial freedom, you must ask what financial freedom means to you. Stay positive about your ability to pull yourself out of the mire and put yourself on the right road. What does it mean to you, winning the lottery or building your own business empire, maybe somewhere in between?

This is about more than taking care of your current situation; you need to plan for the feature. To me, it is the luxury of not having to worry about waking up to make it to work on time to work for someone else, and not having to worry about how much something costs it is a lifestyle.

If you are looking for the answers to financial freedom then here are some practical ways to get on track now: first, you must understand that financial success is an emotional process and you must acquire a mindset for it.  Change your thinking - begin to visualize yourself with it.

In order to win  you need to have your values, goals and priorities aligned. The first step to financial freedom is creating a budget you can stick with. The only truly effective way to get out of debt and achieve your goal is by making your own carefully constructed budget and debt management program, as scary as that might sound, it's easier than you think. It is within your grasp with just a little time and effort on your part.

It takes courage to confront your monetary past and to make changes in your life that will help you achieve true success. You may need to change the old ways of how you think about money - you may need to sacrifice immediate gratification for future rewards - but after you gain clarity and conviction about money, financial freedom can be yours.

Next step is to look at what you need, skills, money and time to achieve this objective, you will also need a trusted financial freedom coach or wealth coach that would help guide you and advice you, helping to speed up the process. It is best to be your own coach!

 People go to their offices and wonder if they will ever accomplish financial freedom.  In many situations these people become discouraged if they are not financially free within their set time period, but as your lifestyle changes so will your needs, so it is more effective, to set material goals as your financial freedom. If you have some very good small business ideas to generate extra income, take it to heart that accurate accounting is at the literal heart of a profitable business.

Funding Note: More than ever we are hard pressed to try to recession proof our investments against the impending global financial crisis.  The dow Jones average is on the slide as well as the financial markets (not un-like the stock market crash in 1929). Money is tight and only the frugal will survive this downturn.                          

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, cash flow 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. You should seek small business loans or small business grants.

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