Accounting Elements

Question 1

Asset

Answer 1

An asset is a present economic resource controlled by the entity as a result of past events. An economic resource is a right that has the potential to produce future economic benefits

Question 2

Current asset

Answer 2

Current assets are cash and other types of assets held primarily for the purpose of sale or trading, or are reasonably expected to be converted to cash, sold or consumed by a business within 12 months after the end of the reporting period.

Question 3

Non current asset

Answer 3

Non-current assets are expected to be used by the business entity for a number of years and are not held for resale.

Question 4

Liability

Answer 4

A present obligation of the entity to transfer an economic resource as a result of past events

Question 5

Current liability

Answer 5

Current liabilities are obligations of the entity that are reasonably expected to be settled within 12 months after the end of the reporting period.

Question 6

Non-current liability

Answer 6

Non-current liabilities are obligations of the entity that are not required to be settled within 12 months after the end of the reporting period.

Question 7

Owner’s Equity

Answer 7

The residual interest in the assets of the entity after all its liabilities have been deducted.

Question 8

Revenues

Answer 8

Revenues are increases in assets or decreases in liabiltiies that results in a decrease in Owner’s Equity, other than those relating to contributions from the Owner
Revenue arises in the course of the ordinary activities of a business and includes items such as sales, fees, interest, dividends, royalties and rent.

Question 9

Expenses

Answer 9

Decreases in Assets or increases in liabilities that results in a decrease in Owner’s Equity, other than those relating to distributions from the owner. Expenses encompass losses as well as those expenses that arise in the course of the ordinary activities of the business.