Accounting Equation

Question 1

Assets

Answer 1

A resource controlled by an entity, as a result of past events, from which future economic benefits are expected to flow to the entity.

Question 2

Liabilities

Answer 2

A present obligation of the entity as a result of past events, the settlement
of which is expected to result in an outflow from the entity of resources embodying economic benefits.

Question 3

Owner’s Equity

Answer 3

The residual interest in the assets of the entity after the deduction of its liabilities.

Question 4

Revenues

Answer 4

An inflow of economic benefits (or saving in outflows) in the form of an increase in assets (or decrease in liabilities) that increases owner’s equity, except for capital contributions by the owner.

Question 5

Expenses

Answer 5

An outflow or consumption of economic benefits (or reduction in inflows) in
the form of a decrease in assets (or increase in liabilities) that reduces owner’s equity, except for drawings by the owner.