Advance Accounting Essay Example | Topics and Well Written Essays - 2000 words

Advance Accounting - Essay Example ncome is generally identified as a construct that causes an entity’s money supply to increase for a specific period of time (Auger, Burke, Devinney, & Louviere, 2003). The means which help the organization in increasing cash reserves is called an asset whereas, the source that causes the money supply of the company to drain is known as expense or liability. The expense occurs when an organization has to pay money in order to keep its daily operations running and this particular head includes salaries of employees, utility bills and other office related short term costs. However, the liability is of two kinds. The first one is called short term liability that has to be paid within one year while the other one which is usually of a long term nature and has to be paid over the tenure of more than one year. The companies always attempt to keep its expenses and liabilities less than the value of income. The notion of income changed a great deal whereas, other business models emerged that included no tangible product but they started to sell services such as hotels, medical professionals and even psychologists. The revenues are generated against rendering services to the customer base in the industry (Badelt & Weiss, 1990). In the past times, services industry was not a common way of making a living but now it is considered the most lucrative one regarding its ability to help people in generating income. The professional lenders are also lending their money in order to obtain substantial level of return on the base amount. The capitalists are making money with the help of lending their financial resources to others and interest income is realized as a consequence. The traditional income’s definition is modified and now one does not have to do anything for anyone in order to make obscene amount of money (Greve & Salaff, 2003). The professional lenders have accumulated financia l power by either inheriting the wealth or they managed to make money by hard working in the