1-4 Conceptual Framework

Question 1

Point in Time Elements

Answer 1

Assets
Liabilities
Equity

Question 2

Period of Time Elements

Answer 2

Investments by owners
Distributions to owners
Comprehensive income
Revenues/Expenses
Gains/Losses

Question 3

Asset

Answer 3

Probable future economic benefits obtained by a company
Ex: Cash
Financial Statement: Balance Sheet

Question 4

Liability

Answer 4

Obligation to transfer cash (or other resources) resulting from past transactions
Ex: Accounts Payable
Financial Statement: Balance Sheet

Question 5

Equity

Answer 5

Owner’s residual interest in the assets less liabilities of a company
Ex: Stockholder’s equity
Financial Statement: Balance Sheet

Question 6

Investment by Owners

Answer 6

Increase in net assets for an ownership interest
Ex: Common stock issued for cash
Financial Statement: Stockholder’s Equity Statement

Question 7

Distribution to Owners

Answer 7

Decrease in net assets by transfer of assets to the owners of the company
Ex: Dividend paid in cash
Financial Statement: Stockholder’s Equity Statement

Question 8

Comprehensive Income

Answer 8

Changes in equity during a period from nonowner sources
Ex: Unrealized gain or loss - other comprehensive income
Financial Statement: Statement of Comprehensive Income

Question 9

Revenue

Answer 9

Inflow of an asset settlement of a liability from delivery or production of a good or providing a service through ongoing ongoing primary operations
Ex: Sales Revenue
Financial Statement: Income Statement

Question 10

Expense

Answer 10

Outflow of an asset and/or incurrence of a liability from delivery or production of a good or providing a service through ongoing primary operations
Ex: Selling Expense
Financial Statement: Income Statement

Question 11

Gain

Answer 11

Increase in equity from peripheral or incidental activities and other transactions except those that result from revenues or investment by owners
Ex: Gain on disposal of a fixed assed
Financial Statement: Income Statement

Question 12

Loss

Answer 12

Decrease in equity from peripheral or incidental activities and other transactions except those that result from expenses or distributions to owners
Ex: Loss on disposal of fixed asset
Financial Statement: Income Statement