Finance Basics
Let’s understand Finance by help of a Story. Imagine we’re in Italy, which is also one of my favorite places, a nice beach city, where a man called Ahmed is selling souvenirs to tourists. He only sells one item, A beautiful plate made from colorful glass. In the morning, he leaves his home with 100 euros, and goes to the manufacturer of the souvenir. Each plate costs one euro, so Ahmed buys 100 pieces with his 100 euros. He walks to the beach and sells the plates to tourists for five euros a piece, and by noon, he sold out. He goes home happily, and repeats the same process the next day. After a month, he wants to know how much the business made. What if he sold more than one item? Which one was more profitable? Would it make sense to expand his business, like rent a fixed stand at the beach? Without a way of recording the daily activities of his business, he’s not going to be able to answer these questions. Accounting makes this possible. Not only will each financial transaction...