What is the meaning of it all?

Accounting is built around the equation: Assets = Liabilities + Owner's Equity. For the equation, and thus the accounting system to function properly, it is assumed that a business owes someone for everything it has. It is also assumed that the business is self-contained. What the business has (or owns) are called Assets and it either owes outsiders, called Liabilities, or owes the owner, called Owner's Equity, for them. The business owes the owner for any monies or other assets that the owner brings into the business (called investing). It also owes the owner for any profit it makes. The owner has to accept any loss the business suffers. In other words, profit increases what the business owes the owner and a loss decreases what the business owes the owner. Profit or Loss is a calculation of: Revenues - Expenses. If Revenues are more than Expenses, there is Profit. If Expenses are more than Revenues, there is Loss. Carried one step further, then, Revenues increase Owner's Equity and Expenses decrease Owner's Equity. Revenues are what the business earns for doing what it is in business to do. Expenses are the cost of assets the business uses to generate Revenues. The purpose of the accounting system is to keep a record of the changes in Assets, Liabilities and Owner's Equity (including Revenues and Expenses) and to report the effects of those changes. The reports are called financial statements and there are different financial statements to report different things. The Balance Sheet reports what Assets, Liabilities and Owner's Equity the business has as of a certain date. The Income Statement reports the total Revenues and Expenses and the difference (Profit of Loss) for a specific period of time (month, quarter, year, etc.). The Statement of Owner's Equity (sometimes called Statement of Changes in Owner's Equity or Capital Statement) reports why and how Owner's Equity changed for a specific period of time (month, quarter, year, etc.). The Statement of Cash Flows reports the sources and uses of Cash for a specific period of time (month, quarter, year, etc.).