Accounting

Question 1

Five elements of financial statements are:

Answer 1

Assets
Liabilities
Equity
Income
Expenses

Question 2

Definition of elements
Assets

Answer 2

Assets are resources that an entity controls, which come from past events and are expected to bring future benefits.

Question 3

Liabilities –

Answer 3

Liabilities are current obligations from past events that will likely lead to an outflow of future economic benefits.

Question 4

Equity

Answer 4

Equity is what remains in the assets of an entity after subtracting all its liabilities.

Question 5

Income

Answer 5

Income is the increase in economic benefits (inflows or asset enhancements, or liability reductions) that boost equity, excluding contributions from the entity’s owners.

Question 6

Expenses

Answer 6

Expenses are decreases in economic benefits (outflows, asset depletion, or liabilities incurred) that reduce equity, excluding distributions to the entity’s owners.

Question 7

A transaction is included in one or more of the elements in the financial statements only if it:

Answer 7

A transaction is included in the financial statements if it:

Meets the definition of an element.
It’s likely that future economic benefits will flow to or from the entity.
It can be measured reliably in monetary terms.

Question 8

Accounting equation

Answer 8

Assets = Owner’s equity + Liabilities