The Business of Living - Part 2

Abstract

This chapter is a continuation of Chapter 2. It continues our consideration of various kinds of transaction and our treatment of your personal balance sheet or statement of assets and liabilities as the primary accounting document. You now have all the assets that you need, and at this point you could say that your life “business” is set up, and that you are ready to face the world. However, your cash has fallen to quite a low level, and we noted that you do need some income quite soon. Fortunately, you have been offered a job, which will pay you £1,250 per month after tax and other deductions. Given your impending cash crisis, you are fortunate that it is the kind of job - and there are some - that pays your salary monthly, in advance. However, in coming to record the receipt of your first month’s pay we appear to have a slight problem. A balance sheet only records assets and liabilities. Earnings do not seem to fit into either category - or do they?