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Miami, FL, August 4th, 2014
* Assets.
“John our client” has done the first step to open up the doors
of his business. His new product is already set to get into
production. Now he needs to acquire some row material or
inventory to full fit the next step, which it is production. We
have to keep in mind how important in to differentiate between
expenses and assets. An asset is the purchase of a resource
either tangible or intangible that after certain process, will
get ready for sell to its customers; in the other hand an
expense is something that you buy with purpose of keep running
the business, for example office supplies and similar. Our
entrepreneur needs $200.00 of row material to do the first
production batch, unfortunately he is new into this business,
therefore he hasn't established any credit yet to buy the items
needed; then he has no choice but to use his own funds. How do
we account for this transaction? Well simple, just look and the
following entry:
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* Fernando Angel
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