The 3 Things To Avoid When Emailing Your List

When you decide to have an opt-in list, it is not just a matter of sending your subscribers your promotional newsletters or catalogs. There are many things to consider in avoiding many complications. While there are so many ways you can make people subscribe to your list, there are also some things you must do to avoid subscribers from wanting to get off from your list.

Aside from that, you also want to avoid any problems with the law and your internet service provider or ISP. There are now many laws and rules that are applied to help protect the privacy of the internet users from spamming and unwanted mails. With the popularity of the electronic mail as a medium for marketing because of the low cost, many company’s have seized the opportunity and have flooded many people’s e-mail accounts with promotional mail.

But, with an opt-in list, you avoid this annoyance because people subscribe to the list; they want to receive the newsletters and promotional materials. They have consented to being on the list by subscribing themselves, just don’t forget to put an unsubscribe feature everytime in your opt-in list so that you avoid any confusion. There may be times when an email account was provided when the real owner didn’t want to subscribe.

It is essential that you keep your list clean and manageable. Arrange it by using the many tools and technologies available for your opt-in list. Do not worry; your investment in this marketing strategy is well worth it with all the coverage you will get which will likely be converted into sales then to profit.

Keep yourself and your business out of trouble and potential run-ins with the law and the internet service providers. Keep your operation legit and clean. Your reputation as a legitimate businessman and a legitimate site depends on your being a straight and true marketing strategist. As a tip, here are three things to avoid when emailing your list.

1) Take notice of your unsuccessful sends. These are the e-mails that bounce. Bounced emails, also known as undeliverable messages, are those messages that, for whatever reason, were not successfully received by the intended recipient.

There are bounces that happen or occur because the server was busy at that time but can still be delivered in another time. There are also bounces because the inbox of the recipient is full at that time. There are those bounce messages that are simply undeliverable ever. The reason for this is that it may be an invalid email address, a misspelled email address, or an email address that was abandoned and erased already.

Manage your list by putting markings on those that bounce. Erase an email account from your list so that you have an accurate statistics and records as to how many are actually receiving your mail. You may also want to check the spellings of your email addresses in your list. One common mistake is when an N instead of an M is placed in the .com area.

2) Always provide an unsubscribe feature in your site and an unsubscribe link in your mails. When someone in your list files a request to be unsubscribed, always take that request seriously. If you don’t take them off your list and keep sending them your e-mails, you are now sending them spam mail.

When you are reported as a spammer, you and your business can get into a lot of trouble. You can be reported to the authorities and maybe blacklisted by many internet service providers. You will lose a lot of subscribers this way and many more in potential subscribers.

3) Do not provide pornographic or shocking and disturbing content in your newsletters. It is hard to decipher the age of the recipient and many complaints may stem from these. Controversial issues also are to be avoided to not be branded by your subscribers. Stick to the nature of your site and business.

Always remember these tips in this article so that you can have a healthy relationship with your subscribers as well as be kept within the boundaries of what is allowed in sending mails to an opt-in list.

Affordable Advertising on Craigslist

The advertising on Craigslist is certainly affordable. In fact there is no fee for the majority of posts made on Craigslist. Craigslist began as a non-profit organization but in 1999 it was converted to a for profit organization. However, operating costs are supported by charging nominal fees for help wanted advertisements placed on the San Francisco, Los Angeles and New York City Craigslist websites. Additionally, there is a fee for brokerage apartment listings in New York City.

The vast majority of those posting advertisements on any of the Craigslist over 300 websites are not paying a fee to do so. This definitely makes posting advertisements on Craigslist to be worthwhile from a financial standpoint. While the advertisements are free care should be taken to post these advertisements judiciously because although there is financial loss, poor posting can result in a loss of time and resources if it leads to poor profit potential.

Why Craigslist is Free

Although the founder of Craigslist, Craig Newmark, was approached in 1997 about the possibility of running banner advertisements on Craigslist to generate a profit, he made the decision to keep Craigslist as a noncommercial website. Even after Craigslist was converted to a for profit organization commercialization did not infiltrate the website. The points listed in the Craigslist mission statement demonstrate why Craigslist has remained noncommercial:

* Giving each other a break, getting the word out about everyday, real-world stuff
* Restoring the human voice to the Internet, in a humane, non-commercial environment
* Keeping things simple, common-sense, down-to-earth, honest, very real
* Providing an alternative to impersonal, big-media sites
* Being inclusive, giving a voice to the disenfranchised, democratizing…
* Being a collection of communities with similar spirit, not a single monolithic entity

Advertising on Craigslist vs. Affiliate Marketing

Affiliate marketing is another type of marketing which many business owners find to be both worthwhile and affordable. For many the appeal of affiliate marketing is the affiliates are not compensated for their efforts unless the business owner sees some type of gain from the advertising. This gain may be in the form of website traffic in the case of pay per click marketing, in the form of sales in pay per sale marketing or in the form of potential leads when a website visitor performs a specific action such as registering with a website or signing up for an offer.

While affiliate marketing is very appealing there are others who prefer advertising on Craigslist. The advantages Craigslist offers to advertisers is, of course, that the advertisers never pay for their business advertisements and the community receives a great deal of website traffic already so driving traffic to the website is not a concern.

Why Free Is Not Always Better

However, there are some specific instances where free advertising is not the best type of advertising available. Consider a product or service for which Craigslist does not have an appropriate category. In this case advertising on Craigslist may not be worthwhile because although the advertisement is free, it is also not likely to receive a great deal of attention from members of the target audience. In this case, advertising on Craigslist may be a waste of resources.

Another example of an instance when Craigslist may not be a great advertising option is when the market is already saturated with competitors’ advertisements. In this case it can be difficult to sway customer loyalty so it might be more worthwhile to pay for advertising in a less crowded market.

Affiliate Marketing through Craigslist

Craiglist is an extensive online community which has a great deal to offer to users of this community. With approximately four billion page views per month it should come as no surprise that Craigslist can offer a wealth of financial opportunities to savvy Internet marketers who know how to capitalize on the popularity of this website. Affiliate marketing is one of the ways knowledgeable Internet marketers can expand on the profitability of their websites. Craigslist provides wonderful opportunities for both ecommerce website owners seeking affiliates to market for them as well as those who are in the business of affiliate marketing who are looking for new opportunities to market for another business. This article will provide an explanation of affiliate marketing and will also provide information on how Craigslist can be used to either find affiliates or affiliate opportunities.

What is Affiliate Marketing?

Affiliate marketing is essentially a marketing campaign in which the business owner only pays the affiliate based on performance. Unlike conventional marketing campaigns where the business owner pays for the advertising regardless of the results produced by the advertisements, in affiliate marketing the business owner only pays when a specific result is achieved. Affiliate marketing usually takes place in the following three forms:

* Pay Per Click
* Pay Per Sale
* Pay Per Lead

In a pay per click affiliate marketing campaign the affiliate places a coded link on their website and each time a visitor to their website clicks through the link to the sponsor’s website, the affiliate receives a sum of money. The amount of money they receive is based on an agreement between the sponsor and the affiliate. This amount can be cents, dollars or even a fraction of a cent. In a pay per sale campaign the affiliate is not compensated when the visitor clicks through to the sponsor’s website unless they also make a purchase when they click through this link. Again the amount of money the affiliate receives will depend on a pre-determined agreement and may be a specific amount or a percentage of the sale. In a pay per lead program the affiliate receives monetary compensation when a visitor clicks through the affiliate link and performs a specific action such as registering at the sponsor’s website or requesting additional information.

Using Craigslist to Find Potential Affiliates

Business owners who are interested in finding affiliates to promote their website may use Craigslist for the purpose of finding these affiliates. It may seem logical to post affiliate opportunities in the jobs section of Craigslist but it is important to note this is against Craigslist’s job posting policies. Review of the policy for posting jobs on Craigslist will verify these requirements. Therefore those who are interested in finding affiliates will have to take advantage of other areas of Craigslist to find affiliates.

Visiting discussion forums related to your business may be one way to find potential affiliates. However, when using the discussion forums, care should be taken to avoiding spamming the discussion forums with links to sign up for your affiliate program. Such spamming techniques are likely to not be taken seriously by potential affiliates and may incur more severe penalties by Craigslist moderators. The best way to find potential affiliates is to make logical contributions to discussions and get to know other participants offline or to include a link to more information on your affiliate marketing program whenever you post.

Using Craigslist to Find Opportunities for Affiliates

Those who generate a profit from acting as an affiliate for others can find new affiliate opportunities through Craigslist. Although posting these opportunities on the job boards are prohibited it is possible for advertisements of this nature to appear either because the original poster was not aware of the restrictions or because they deliberately ignored the restrictions. These types of advertisements are likely to be removed when discovered but they may exist for a short time without being noticed.

Those who act as affiliates can also find potential leads by placing advertisements in the services section or the resumes section. They may also find potential leads by networking with those in the discussion forums.

Adsense Alternatives 1

Many people have started using Google's AdSense program, but there are some who find it a bit too uncertain or simply not suiting their own requirements from an ad program.

But thankfully for such people, there are many alternatives to AdSense which attempt to alleviate some of its shortcomings. Here is a list of the most noteworthy ones from the lot with a description concerning each one.

AllFeeds 

AllFeeds has a great pool of online advertisers to choose from. It also features many display formats that you can choose from. These include banners, buttons, XML feeds, DHTML pop-ups and so on. It also features real time reporting of your ad status. The site will mail a check every month, provided that you earn more then $25.00, while rolling over earnings for the next month if you don't. Another interesting thing about AllFeeds is that it integrates with Google AdSense, maximizing your earnings with AdSense.

MarketBanker 

MarketBanker allows you the unique possiblity to set the pricing for your site. It also allows you to allow or reject any link that appears on your site (although AdSense itself does a very good job of this as well, with URL filters) There's also a statistics section which will allow you to see how well your site is doing. The ads are small just like AdSense's and they're just as easy to set up. Also, registration for MarketBanker is free.

BidClix 

BidClix is different because it has advertisers compete for clicks on your site, which in turn is meant to generate the highest possible profits for your page. It also has a very large pool of advertisers which ensure there are plenty of people to choose your site. However, it does require more polish on site contents then AdSense. As most sites, real time statistics are available and its very easy to get started with this service, but it's also very flexible.

Chitika 

RealContext uses Artificial intelligence to retrieve the most relevant ads for your page. And there's an extra feature which makes RealContext unique as well. Keywords are selected based upon which previous selections payed off and which didn't. That means there's a constant feedback process that ensures you gain better revenue from your ads. It also supports blocking certain adds and child-safe filtering and many more options.

AdHearus 

AdHearus is a very feature-packed contextual ad provider. As with AdSense, advertisements are targeted but it doesn't stop here at all. The ads are very flexible, you can select from text-ads, banners, rectangles, pop-ups, pop-unders or skyscrapers. You can also display your own ads, through rotation, both on your site and on other affiliate sites, which makes AdHearus a hybrid with conventional advertising technologies. There's a very comprehensive on-line real time reporting feature and, as usual with such services, starting out is free and it's a breeze.

AffiliateSensor 

AffiliateSensor has highly customizable ad blocks, which you can make for yourself with an easy to use on-line interface. You also get realtime reporting with clicks-by-domain, page and refferer. There's integration with Google AdSense as well, through the google alternate ad url so AffiliateSensor can be used as a substitute for Google PSA's (Public Service Ads).

Kanoodle Bright Ads 

Kanoodle's offering allows publishers to get ads related to topics or segments, and not the traditional keyword oriented ads. The site also groups publisher sites with advertisers by hand to ensure high-revenue generating ads. And speaking of revenue, the amount of money you receive is a clear 50% share of the amount of money Kanoodle recieves for an advertiser.

TargetPoint 

TargetPoint is oriented more towards content publishers. It offers full control over the look the ads, statistics over your site's overall performance and better revenue. It's free to register and you earn a guaranteed 60% of the total revenue. You can get payed with Paypal of Bank checks and (most times) wire transfers as well.

Clicksor 

Clicksor will earn you as much as 60% from the amount of money your website produces. What you get is about the same as AdSense, there are targeted text ads, you can view the revenues from your website in real time. You can receive money via PayPal or through a check every two weeks, provided that you have earned more then $50. If you haven't made that much, your earning roll over to the next period.

Managing the Bottom Line

If you don't keep track of how much money you're making, you have no idea whether your business is successful or not. You can't tell how well your marketing is working. And I don't just mean you should know the amount of your total sales or gross revenue. You need to know what your net profit is. If you don't, there's no way you can know how to increase it.

If you want your business to be successful, you need to make a financial plan and check it against the facts on a monthly basis, then take immediate action to correct any problems. Here are the steps you should take:

* Create a financial plan for your business. Estimate how much revenue you expect to bring in each month, and project what your expenses will be.

* Remember that lost profits can't be recovered. When entrepreneurs compare their projections to reality and find earnings too low or expenses too high, they often conclude, "I'll make it up later." The problem is that you really can't make it up later: every month profits are too low is a month that is gone forever.

* Make adjustments right away. If revenues are lower than expected, increase efforts in sales and marketing or look for ways to increase your rates. If overhead costs are too high, find ways to cut back. There are other businesses like yours around. What is their secret for operating profitably?

* Think before you spend. When considering any new business expense, including marketing and sales activities, evaluate the increased earnings you expect to bring in against its cost before you proceed to make a purchase.

* Evaluate the success of your business based on profit, not revenue. It doesn't matter how many thousands of dollars you are bringing in each month if your expenses are almost as high, or higher. Many high-revenue businesses have gone under for this very reason -- don't be one of them.

Depreciation reporting

In an accountant's reporting systems, depreciation of a business's fixed assets such as its buildings, equipment, computers, etc. is not recorded as a cash outlay. When an accountant measures profit on the accrual basis of accounting, he or she counts depreciation as an expense. Buildings, machinery, tools, vehicles and furniture all have a limited useful life. All fixed assets, except for actual land, have a limited lifetime of usefulness to a business. Depreciation is the method of accounting that allocates the total cost of fixed assets to each year of their use in helping the business generate revenue.

Part of the total sales revenue of a business includes recover of cost invested in its fixed assets. In a real sense a business sells some of its fixed assets in the sales prices that it charges it customers. For example, when you go to a grocery store, a small portion of the price you pay for eggs or bread goes toward the cost of the buildings, the machinery, bread ovens, etc. Each reporting period, a business recoups part of the cost invested in its fixed assets.

It's not enough for the accountant to add back depreciation for the year to bottom-line profit. The changes in other assets, as well as the changes in liabilities, also affect cash flow from profit. The competent accountant will factor in all the changes that determine cash flow from profit. Depreciation is only one of many adjustments to the net income of a business to determine cash flow from operating activities. Amortization of intangible assets is another expense that is recorded against a business's assets for year. It's different in that it doesn't require cash outlay in the year being charged with the expense. That occurred when the business invested in those tangible assets.

Balance sheet

A balance sheet is a quick picture of the financial condition of a business at a specific period in time. The activities of a business fall into two separate groups that are reported by an accountant. They are profit-making activities, which includes sales and expenses. This can also be referred to as operating activities. There are also financing and investing activities that include securing money from debt and equity sources of capital, returning capital to these sources, making distributions from profit to the owners, making investments in assets and eventually disposing of the assets.

Profit making activities are reported in the income statement; financing and investing activities are found in the statement of cash flows. In other words, two different financial statements are prepared for the two different types of transactions. The statement of cash flows also reports the cash increase or decrease from profit during the year as opposed to the amount of profit that is reported in the income statement.

The balance sheet is different from the income and cash flow statements which report, as it says, income of cash and outgoing cash. The balance sheet represents the balances, or amounts, or a company's assets, liabilities and owners' equity at an instant in time. The word balance has different meanings at different times. As it's used in the term balance sheet, it refers to the balance of the two opposite sides of a business, total assets on one side and total liabilities on the other. However, the balance of an account, such as the asset, liability, revenue and expense accounts, refers to the amount in the account after recording increases and decreases in the account, just like the balance in your checking account. Accountants can prepare a balance sheet any time that a manager requests it. But they're generally prepared at the end of each month, quarter and year. It's always prepared at the close of business on the last day of the profit period.

Gains and Losses

It would probably be ideal if business and life were as simple as producing goods, selling them and recording the profits. But there are often circumstances that disrupt the cycle, and it's part of the accountants job to report these as well. Changes in the business climate, or cost of goods or any number of things can lead to exceptional or extraordinary gains and losses in a business. Some things that can alter the income statement can include downsizing or restructuring the business. This used to be a rare thing in the business environment, but is now fairly commonplace. Usually it's done to offset losses in other areas and to decrease the cost of employees' salaries and benefits. However, there are costs involved with this as well, such as severance pay, outplacement services, and retirement costs.

In other circumstances, a business might decide to discontinue certain product lines. Western Union, for example, recently delivered its very last telegram. The nature of communication has changed so drastically, with email, cell phones and other forms, that telegrams have been rendered obsolete. When you no longer sell enough of a product at a high enough profit to make the costs of manufacturing it worthwhile, then it's time to change your product mix.

Lawsuits and other legal actions can cause extraordinary losses or gains as well. If you win damages in a lawsuit against others, then you've incurred an extraordinary gain. Likewise if your own legal fees and damages or fines are excessive, then these can significantly impact the income statement.

Occasionally a business will change accounting methods or need to correct any errors that had been made in previous financial reports. Generally Accepted Accounting Procedures (GAAP) require that businesses make any one-time losses or gains very visible in their income statement.

Assets and Liabilities

Making a profit in a business is derived from several different areas. It can get a little complicated because just as in our personal lives, business is run on credit as well. Many businesses sell their products to their customers on credit. Accountants use an asset account called accounts receivable to record the total amount owed to the business by its customers who haven't paid the balance in full yet. Much of the time, a business hasn't collected its receivables in full by the end of the fiscal year, especially for such credit sales that could be transacted near the end of the accounting period.

The accountant records the sales revenue and the cost of goods sold for these sales in the year in which the sales were made and the products delivered to the customer. This is called accrual based accounting, which records revenue when sales are made and records expenses when they're incurred as well. When sales are made on credit, the accounts receivable asset account is increased. When cash is received from the customer, then the cash account is increased and the accounts receivable account is decreased.

The cost of goods sold is one of the major expenses of businesses that sell goods, products or services. Even a service involves expenses. It means exactly what it says in that it's the cost that a business pays for the products it sells to customers. A business makes its profit by selling its products at prices high enough to cover the cost of producing them, the costs of running the business, the interest on any money they've borrowed and income taxes, with money left over for profit.

When the business acquires products, the cost of them goes into what's called an inventory asset account. The cost is deducted from the cash account, or added to the accounts payable liability account, depending on whether the business has paid with cash or credit.

Making a Profit

Accountants are responsible for preparing three primary types of financial statements for a business. The income statement reports the profit-making activities of the business and the bottom-line profit or loss for a specified period. The balance sheets reports the financial position of the business at a specific point in time, often the last day of the period. and the statement of cash flows reports how much cash was generated from profit what the business did with this money.

Everyone knows profit is a good thing. It's what our economy is founded on. It doesn't sound like such a big deal. Make more money than you spend to sell or manufacture products. But of course nothing's ever really simple, is it? A profit report, or net income statement first identifies the business and the time period that is being summarized in the report.

You read an income statement from the top line to the bottom line. Every step of the income statement reports the deduction of an expense. The income statement also reports changes in assets and liabilities as well, so that if there's a revenue increase, it's either because there's been an increase in assets or a decrease in a company's liabilities. If there's been an increase in the expense line, it's because there's been either a decrease in assets or an increase in liabilities.

Net worth is also referred to as owners' equity in the business. They're not exactly interchangeable. Net worth expresses the total of assets less the liabilities. Owners' equity refers to who owns the assets after the liabilities are satisfied.

These shifts in assets and liabilities are important to owners and executives of a business because it's their responsibility to manage and control such changes. Making a profit in a business involves several variable, not just increasing the amount of cash that flows through a company, but management of other assets as well.

Profit and Loss

It might seem like a no-brainer to define just exactly what profit and loss are. But of course these have definitions like everything else. Profit can be called different things, for a start. It's sometimes called net income or net earnings. Businesses that sell products and services generate profit from the sales of those products or services and from controlling the attendant costs of running the business. Profit can also be referred to as Return on Investment, or ROI. While some definitions limit ROI to profit on investments in such securities as stocks or bonds, many companies use this term to refer to short-term and long-term business results. Profit is also sometimes called taxable income.

It's the job of the accounting and finance professionals to assess the profits and losses of a company. They have to know what created both and what the results of both sides of the business equation are. They determine what the net worth of a company is. Net worth is the resulting dollar amount from deducting a company's liabilities from its assets. In a privately held company, this is also called owner's equity, since anything that's left over after all the bills are paid, to put it simply, belongs to the owners. In a publicly held company, this profit is returned to the shareholders in the form of dividends. In other words, all liabilities have the first claim on any money the company makes. Anything that's left over is profit. It's not derived from one element or another. Net worth is determined after all the liabilities are deducted from all the assets, including cash and property.

Showing a profit, or a positive figure on the balance sheet, is of course the aim of every business. It's what our economy and society are built on. It doesn't always work out that way. Economic trends and consumer behaviors change and it's not always possible to predict these and what income they'll have on a company's performance.

Careers

There are many different careers in the field of accounting ranging from entry-level bookkeeping to the Chief Financial Officer of a company. To achieve positions with more responsibility and higher salaries, it's necessary to have a degree in accounting as well as achieve various professional designations.

One of the primary milestones in any accountant's career is to become a Certified Public Accountant or CPA. To become a CPA you have to go to college with a major in accounting. You also have to pass a national CPA exam. There's also some employment experience required in a CPA firm. This is generally one to two years, although this varies from state to state. Once you satisfy all those requirements, you get a certificate that designates you as a CPA and you're allowed to offer your services to the public.

Many CPAs consider this just one stepping stone to their careers. The chief accountant in many offices is called the controller. The controller is in charge of managing the entire accounting system in a business stays on top of accounting and tax laws to keep the company legal and is responsible for preparing the financial statements.

The controller is also in charge of financial planning and budgeting. Some companies have only one accounting professional who's essentially the chief cook and bottle washer and does everything. As a business grows in size and complexity, then additional layers of personnel are required to handle the volume of work that comes from growth. Other areas in the company are also impacted by growth, and it's part of the controller's job to determine just how many more salaries the company can pay for additional people without negatively impacting growth and profits.

The controller also is responsible for preparing tax returns for the business; a much more involved and complex task than completing personal income tax forms! In larger organizations, the controller can report to a vice president of finance who reports to the chief financial officer, who is responsible for the broad objectives for growth and profit and implementing the appropriate strategies to achieve the objectives.

Accounting Principles

If everyone involved in the process of accounting followed their own system, or no system at all, there's be no way to truly tell whether a company was profitable or not. Most companies follow what are called generally accepted accounting principles, or GAAP, and there are huge tomes in libraries and bookstores devoted to just this one topic. Unless a company states otherwise, anyone reading a financial statement can make the assumption that company has used GAAP.
 

If GAAP are not the principles used for preparing financial statements, then a business needs to make clear which other form of accounting they're used and are bound to avoid using titles in its financial statements that could mislead the person examining it.
 

GAAP are the gold standard for preparing financial statement. Not disclosing that it has used principles other than GAAP makes a company legally liable for any misleading or misunderstood data. These principles have been fine-tuned over decades and have effectively governed accounting methods and the financial reporting systems of businesses. Different principles have been established for different types of business entities, such for-profit and not-for-profit companies, governments and other enterprises.
 

GAAP are not cut and dried, however. They're guidelines and as such are often open to interpretation. Estimates have to be made at times, and they require good faith efforts towards accuracy. You've surely heard the phrase "creative accounting" and this is when a company pushes the envelope a little (or a lot) to make their business look more profitable than it might actually be. This is also called massaging the numbers. This can get out of control and quickly turn into accounting fraud, which is also called cooking the books. The results of these practices can be devastating and ruin hundreds and thousands of lives, as in the cases of Enron, Rite Aid and others.

Basic Accounting Principles

Accounting has been defined as, by Professor of Accounting at the University of Michigan William A Paton as having one basic function: "facilitating the administration of economic activity. This function has two closely related phases: 

1) measuring and arraying economic data; and 

2) communicating the results of this process to interested parties."

As an example, a company's accountants periodically measure the profit and loss for a month, a quarter or a fiscal year and publish these results in a statement of profit and loss that's called an income statement. These statements include elements such as accounts receivable (what's owed to the company) and accounts payable (what the company owes). It can also get pretty complicated with subjects like retained earnings and accelerated depreciation. This at the higher levels of accounting and in the organization.

Much of accounting though, is also concerned with basic bookkeeping. This is the process that records every transaction; every bill paid, every dime owed, every dollar and cent spent and accumulated.

But the owners of the company, which can be individual owners or millions of shareholders are most concerned with the summaries of these transactions, contained in the financial statement. The financial statement summarizes a company's assets. A value of an asset is what it cost when it was first acquired. The financial statement also records what the sources of the assets were. Some assets are in the form of loans that have to be paid back. Profits are also an asset of the business.

In what's called double-entry bookkeeping, the liabilities are also summarized. Obviously, a company wants to show a higher amount of assets to offset the liabilities and show a profit. The management of these two elements is the essence of accounting.

There is a system for doing this; not every company or individual can devise their own systems for accounting; the result would be chaos!

What Is Accounting Anyway?

Anyone who's worked in an office at some point or another has had to go to accounting. They're the people who pay and send out the bills that keep the business running. They do a lot more than that, though. Sometimes referred to as "bean counters" they also keep their eye on profits, costs and losses. Unless you're running your own business and acting as your own accountant, you'd have no way of knowing just how profitable - or not - your business is without some form of accounting.

No matter what business you're in, even if all you do is balance a checkbook, that's still accounting. It's part of even a kid's life. Saving an allowance, spending it all at once - these are accounting principles.

What are some other businesses where accounting is critical? Well, farmers need to follow careful accounting procedures. Many of them run their farms year to year by taking loans to plant the crops. If it's a good year, a profitable one, then they can pay off their loan; if not, they might have to carry the loan over, and accrue more interest charges.

Every business and every individual needs to have some kind of accounting system in their lives. Otherwise, the finances can get away from them, they don't know what they've spent, or whether they can expect a profit or a loss from their business. Staying on top of accounting, whether it's for a multi-billion dollar business or for a personal checking account is a necessary activity on a daily basis if you're smart. Not doing so can mean anything from a bounced check or posting a loss to a company's shareholders. Both scenarios can be equally devastating.

Accounting is basically information, and this information is published periodically in business as a profit and loss statement, or an income statement.