---
title: Academy 4. Business Concepts You Need
description: "Foundation, lesson 4: receivables and payables, debits and credits, accrual and cash, sales tax, and the two main financial statements, in plain words."
url: "https://theasst.com/docs/academy-4-business-concepts-you-need/"
updated: "2026-10-30"
category: Academy
---

# Academy 4. Business Concepts You Need

*TBA Foundation · Lesson 4 of 9 · about 2 hours*

## After this lesson you can

- Say in one sentence what accounts receivable and payable are.
- Explain debits and credits well enough to read a ledger.
- Tell accrual from cash, and know why the same month can differ.
- Explain why sales tax is not your revenue.

## Why it matters

TBA does the bookkeeping for you, but you will be asked "why does this show up there?" more often than you expect. Four ideas answer most of it.

## Read

- [Accounting Overview](https://theasst.com/docs/accounting-overview/)
- [Accounting articles](https://theasst.com/docs-category/accounting/) (skim the titles)

## The big picture

**Receivable** is what customers owe you; **payable** is what you owe vendors. **Double entry** records every transaction twice, so total debits always equal total credits; that is how a ledger proves it balances. **Accrual** reporting counts a sale when you invoice it and a cost when you are billed; **cash** reporting counts them when money moves. **Sales tax** you collect is held for the government, so it is a liability until you pay it, not income. Finally, the **balance sheet** shows what you own and owe on one date, and the **profit and loss** shows income and costs over a period. In TBA, customers are called **clients**, and stock you have bought but not sold is an **asset**.

## Try it

1. Open a demo invoice and find where it appears in the general ledger: which account is debited, which credited?
2. Run the profit and loss on the accrual basis, then the cash basis, for the same month. Explain the difference.

## Check yourself

Can you say why sales tax is a liability and not income? A practice quiz and certification exams are planned for a later release.