Accounting Outline

Five Basic Accounts

1. Assets: things you own
2. Liabilities: things you owe
3. Equity: overall net worth
4. Income: increases value
5. Expenses: decreases value

The Equation

Assets - Liabilities = Equity (aka Net Worth)  

Things you own minus things you owe equals your net worth. Consider all financial actions in the light of increasing your net worth.

Assets - Liabilities = Equity + (Income - Expenses)

Assets

Cash/Checking 
Some Mutual Funds
Other Mutual Funds/Stocks/Bonds
Retirement Savings
Car
House
Talent and goodwill  
*Accounts Receivable*

Capital Gains in here?

Liabilities

  Accounts Payable
  Debt  
  Taxes  

Net Worth

The guiding light

Income

Salary
Bonus
Gifts
Interest & Dividends
Other

Expenses

Fixed:

Debt Service  
Physical Plant / Utilities
Insurances  

Variable / Discretionary:

Food
Clothing
Hobbies
Donations

Capital Gains

Resellable assets, such as stocks, bonds, houses, or cars, can change value over time. Some assets could increase in value, some could decrease in value. Capital gains are the profits from selling an asset.