Video narration
Does a business with $100 in its bank account look healthy? Like your checking account, that number tracks cash coming in and going out-but not the whole story. Accounting organizes the business's money activity: what it owns, owes, earns, and spends. But a bank balance is only one number on its own. Assets, what the business owns, equal liabilities, what it owes, plus equity, the owners' share. Separately, profit is revenue, money earned from sales or services, minus expenses, the costs of running the business. Those are different calculations. A business can have cash in the bank and still owe money; profit also doesn't mean all the money has arrived as cash. It helps you see the financial picture behind that one balance. No. The bank shows cash; accounting also shows what the business owns, owes, and earns.