assets/liabilities/capital

assets/liabilities/capital

From now on, let's take a look at each account in earnest. First of all, let's look at the assets, liabilities, and equity that represent my current state.

asset account

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Assets are the sum of all the money available to you. It is used a lot in this sense on a daily basis, so it will not be very strange. It is an asset if you mobilize everything that can be converted into money other than real money, such as the balance in your bankbook, real estate or jeon tax, monthly rent, car, motorcycle, laptop, etc.

It's a bit different, but... Then are health, ability, and youth an asset? I think it can be viewed as an asset. Although it is slightly different from general household management, these can also be managed by quantifying them as assets in terms of self-development. Conversely, if nobody needs to manage real estate, which is an asset, it can be excluded from an asset. In other words, it is up to the user's individual judgment to the extent to which it is taken as an asset.

Assets increase or decrease due to several factors. Usually, when you get a loan (increase in debt) or when you get paid (income), your assets increase. Conversely, paying off a loan or buying something (incurring costs) reduces your assets.

Debt account

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*Debts are debts that must be paid off someday. It's a share you have to pay someday. In fact, whether you have money on hand or not, your debts remain there until they are paid off or forgiven. So, if you don't manage it properly with tools like whooing, you become a scary being.

Let's look at the relationship between debt and assets through loans. If you receive a loan of 1 million won, you have 1 million won in debt, and at the same time, 1 million won goes into your bankbook, so your assets also increase by 1 million won. We usually take loans to ensure that we know the debts we will have to pay off at some point in time, yet we have assets that can be flexible right now. And it is assumed that 300,000 won was spent on this asset. Then, the assets have been reduced to 700,000 won, and the loan debt is still 1 million won. If one day you earn more money and repay 1 million won, you have to give the bank 1 million won in the bankbook, so the bankbook itself will give you 1 million won and your debt will be 0. The order is as follows.

Situation Assets Liabilities
1. Received a loan of 1 million won 1 million won 1 million won
2. Expense 300,000 won 700,000 won 1 million won
3. Earned 2 million won 2.7 million won 1 million won
4. Repay the loan of 1 million won 1.7 million won 0 million won

From this example we can realize one thing. Liabilities can increase your assets, creating temporary financial space. However, it doesn't decrease forever until it is explicitly repaid (perhaps it actually goes beyond not giving and increases interest as it accrues). That is why it is not enough to manage and manage debt.

Debt isn't necessarily negative. It can be positive if the purpose of increasing debt is clear and if you are aware of and manage the risk. In fact, it is useful for companies to look at indicators such as the ratio of debt to equity.

Capital account

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Capital is my pure money minus the portion I owed. If I have 1 million won, of which debt is 200,000 won, my capital is 800,000 won.

Net assets or equity are the same terms. In whooing, I prefer the term capital because it is easier to unify with two letters.

For doubles bookkeeping, you must select an account that causes and results in each transaction. In other words, one day, when I looked at my bankbook, I tried to increase 50,000 won because I had 50,000 won more than the record, but it is difficult to increase 50,000 won by myself. In this case, you can select the capital item. Please refer to https://whooing.com/zAe for more information on this.