Companies that exist to profit depend on revenues. While expenses also play a part in those profits, the more sales a company makes, the more it profits. Therefore, most companies focus on increasing their revenues. These revenues may generate from products or services. Similarly, these products and services will differ from one company to another.

Assets are resources owned and controlled by entities that can result in potential positive economic benefits. These usually include building, land, machinery, inventory, cash, etc. Companies report assets on their balance sheets. On the other hand, expenses are economic outflows during a period. These include utilities, production costs, depreciation, etc. Expenses are a part of

As the business operations of an entity expand, the scope of departments also increases. Similarly, business entities have to adopt more practical accounting and financial reporting approaches for legal and tax purposes. A business entity can no more rely on pre-made accounting templates to log the transactions. There needs to be a solid accounting approach

The accrual-based accounting system implies that the revenues and expenses should be recorded when they are earned or incurred. This accounting approach does not relate receipt or payment of cash with the recognition of the economic transaction. The accrual-based accounting system is based on the matching principle of accounting. The matching principle is one of