CH1-Assets, Liabilities And Tge Accounting Equation

Question 1

IASB Conceptual Framework definition of an ASSET

Answer 1

Resource controlled by the entity
Resulting from a past event

Question 2

IASB Conceptual Framework definition of an LIABILITY

Answer 2

There is expected to be an outflow of economics resources.
An obligation as a result of past events.

Question 3

Main purpose of SOFP

Answer 3

To report the asset, liabilities, and capital of the business at a particular date.

Question 4

Equation

Answer 4

P= (closing-opening) + D - C
Capital = Net Aset
Aset - liability
Aset = capital + Profit - Drawings + liabilities

Question 5

Dual aspect convention of accounting

Answer 5

A change in the value of assets leads to an equal change in the value of liabilities plus capital