Accounting Elements Definitions

Question 1

Assets

Answer 1

Resources a business owns or controls that are expected to provide future benefits

Question 2

Non-current
assets

Answer 2

Resources whose benefits last beyond one financial year and not easily converted to cash.

Question 3

Current assets

Answer 3

Resources whose benefits are used within one financial year and easily converted to cash .

Question 4

Liabilities

Answer 4

Obligations owed by a business to others that are expected to be settled in the future

Question 5

Non-current
liabilities

Answer 5

Amounts due to be paid beyond one financial year. Consolidated as long-term borrowings in the statement of financial position.

Question 6

Current liabilities

Answer 6

Amounts due to be paid within one financial year.

Question 7

Equity

Answer 7

The claim by the owner(s) on the net assets of a business

Question 8

Capital

Answer 8

Resources contributed by the owner for business use

Question 9

Drawings

Answer 9

Assets withdrawn from a business for the owner’s personal/own use

Question 10

Income

Answer 10

Amounts earned through the activities of a business

Question 11

Revenue

Answer 11

Amounts earned through the main activities of a business

Question 12

Sales Returns

Answer 12

Sales returns refers to goods which are returned from customers for reasons like damaged goods, inferior quality of goods or wrong models

Question 13

Expenses

Answer 13

Costs incurred in the operation of a business to earn income in the same accounting period