Welcome to the Basics of Accounting!
Let me take you on a quick, fun journey into the world of accounting by telling you a story that’ll make things simple and clear. Imagine yourself in a bustling city with our main character, Mia, a talented freelance graphic designer. Ready? Let’s dive in! 🚀
Meet Mia and Her Freelance Design Business 🎨
Mia has a passion for creating stunning visuals. She works from home, taking on various design projects for clients, such as logos, marketing materials, and social media graphics. Each month, she sets a goal to earn at least $1,000. 💰
One day, she starts her work with $100 in her account to cover her software subscriptions and any supplies she might need. Mia promotes her services online, and soon enough, she lands a big project for a local bakery. The bakery owner wants a complete branding package, including a logo, business cards, and social media graphics. Mia quotes them $500 for the entire project, and the owner agrees.
After completing the project, Mia submits her invoice and happily receives the payment of $500. At the end of the month, she looks back at her earnings and realizes she’s done well—but she wants to know exactly how her business is performing. Should she invest in new design software? Can she afford to take on more projects? To find these answers, Mia needs to track her finances. 📈
That’s where accounting comes in. Accounting helps Mia systematically record her financial activities, analyze the results, and get a clear picture of how her business is performing. In other words, it’s like a report card for her freelance career, helping her—and anyone else interested—understand its financial health. 📚
Let’s explore the main financial tools Mia will use: the Income Statement and the Balance Sheet.
