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 Large Money Icons

Mortgage Loan Interest Payment Icon Images

Mortgage Loan Interest Payment Icon

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Actives and passives

In itthe Rich daddy, the poor daddyit I wrote how my rich daddy learnt me to financial literacy, since nine years. It seems to me, one of the reasons of success of the book that it practically does not rise above level of understanding of the nine-year child. Here I offer the short review to what are covered by this book. Many years ago the rich daddy has told to me that the report on incomes and expenses name still the report on profits and losses or P&L. The rich daddy has told to me that such form of the reporting is called as the balance report because the parties (actives and passives) should be balanced. Then he has told: "here to the majority of people the financial reporting starts to seem a dark". My poor daddy sincerely considered our house as an active. The rich daddy on it has told: "If your father was financially competent, he would know that its house is not an active, and a passive".

The rich daddy has explained to me that the reason on which so many people name the house an active, consists that it is written down in a column of actives. It means, what even economists and bankers name your house an active only because of a column in which it is written down. For example, your house costs 100 thousand dollars; you have paid for it of 20 thousand pledge and have obtained under the mortgage a loan in 80 thousand. As a result your balance report will look so:

Difference between actives and passives it in net value, that is in cost of property minus obligations. In this case it is your pledge in 20 thousand. The balance report counterbalances all, bookkeepers are happy, the owner of the house is happy.

For the majority of people it is everything that they wish to know about book keeping, and all of them consider what to understand him a debt of each civilised person. For many the fact of purchase of the house and confidence of that, what is it their active, are sources of emotional comfort, pride and confidence of correctness of their behaviour. And the word an active much more pleasantly, than a passive sounds.

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