AOS 1 KK1

Question 1

Accounting Elements

Answer 1

Elements vs Items

Element = classification such as Current Asset, Non Current Asset, Current Liability, Non-Current liability, Owner’s Equity, Revenue and Expenses

Item = a specific current asset such as Accounts Receivable, Inventory, Bank, Equipment, Account Payable, Loan

Question 2

Current Asset

Answer 2

A present economic resource controlled by the entity (as a result of past events) that is reasonably expected to be converted to cash, sold or consumed within the next 12 months after the end of the reporting period.

Examples:
-Bank
-inventory
-Acc. Rec.

Question 3

Non-Current Asset

Answer 3

A present economic resource controlled by the entity (as a result of past events) that is not held for resale and is reasonably expected to be used for more than the next 12 months after the end of the reporting period.

Examples:
-Equipment
-Prepaid items
-Premises
-Van

Question 4

Current Liability

Answer 4

A present obligation of the entity (arising from past events) that are reasonable expected to be settled with a transfer of an economic resource within the next 12 months after the end of the reporting period.

Examples:
-Acc. Payable
-GST payable
-Loan

Question 5

Non-Current Asset

Answer 5

A present obligation of the entity (arising from past events) that are not expected to be settled with a transfer of an economic resource within the next 12 months after the end of the reporting period.

Example:
-Loan
-Mortgage

Question 6

Owners Equity

Answer 6

The residual value in the assets of the entity after deducting all its liabilities.

Question 7

Revenue

Answer 7

Are increases in assets or decreases in liabilities that result in increases in owner’s equity, other than those relating to contributions from the owner.

Question 8

Expenses

Answer 8

Are decreases in assets or increases in liabilities that result in decreases in owner’s equity, other than drawings.