We've all seen on the news how the economy is suffering.
With the accessibility of credit cards and the increased convenience of banking, many people are making use of the economy without actually understanding what it's all about.
Knowing just a little bit about how our economy works can help you get a grasp on what's going on in the United States, and can hopefully keep you financially secure.
Whether you're the owner of a small business trying to cut costs with an accounts payable audit or a stay at home mom trying to figure out the family's cell phone bills, knowing some economics can help you understand it a little better.
On a basic level, an economy is just the buying and selling of goods and services.
This covers everything from getting your oil changed to buying a hot dog at a baseball game.
An infinite number of factors influence the economy, and, in turn, the economy affects our lives everyday.
The stock market is one of the prime representatives of our economy, but it's probably also one of the least understood parts of our country.
The stock market is where people buy and trade stocks.
Stocks are little pieces of "ownership" of a company, and by investing one, you come to own a part of the company.
The basic premise of the stock market is to buy a stock, wait a little, then sell it back for more than you bought it for, resulting in profit.
There are stock markets all over the world, but in the United States, we have the New York Stock Exchange.
While ordinary people can greatly benefit from a successful investment, it's generally the business itself that reaps the most rewards.
With another source of revenue, the business can increase it's profit, which it then uses to hire additional workers, create better products, and invest in more efficient ways to create the product.
These results add up to allow a business to grow and become more successful in the economy.
A business is the product of the economy, and the economy is a product of businesses.
The basic idea of a business is generally a cycle.
An owner purchases supplies from a supplier, they create a service or assemble a product, then they sell their good or service, earn money, which they then use to start the cycle over again.
The ideal outcome is that the business continues to grow and become more successful, supplying the owner with more profit.
Even if you don't plan on starting your own business, these basic concepts apply to you, in the form of utility bills.
These bills, along with the supplies that the business owner bought, comprise an accounts payable.
An accounts payable is basically the record of the amount of money you owe to a company.
Business owners deal with a huge inventory of supplies, and the often invest in an accounts payable audit, which shows exactly where their money is going.