Chapter 1 Glossary

Question 1

Resources owned by a business

Provides future benefit to the entities that use it.

Service potential or future economic benefit results in cash inflows (receipts)

Answer 1

Asset

Question 2

Debts and obligations

Claims against assets

Answer 2

Liabilities

Question 3

Ownership claim on total assets minus liabilities

Answer 3

Owner equity

Question 4

Increase in owner equity from business activities performed

Sale of merchandise

Performance of a service

Answer 4

Revenue

Question 5

Decrease in owner equity from operating business

The cost of assets consumed or services used in the process of earning revenue

Answer 5

Expenses

Question 6

Economic events of the enterprise that get recorded

Event between company and outside enterprise

Answer 6

Transaction

Question 7

Asset

Answer 7

Resources owned by a business

Provides future benefit to the entities that use it.

Service potential or future economic benefit results in cash inflows (receipts)

Question 8

Liabilities

Answer 8

Debts and obligations

Claims against assets

Question 9

Owner equity

Answer 9

Ownership claim on total assets minus liabilities

Question 10

Revenue

Answer 10

Increase in owner equity from business activities performed

Sale of merchandise

Performance of a service

Question 11

Expenses

Answer 11

Decrease in owner equity from operating business

The cost of assets consumed or services used in the process of earning revenue

Question 12

Transaction

Answer 12

Economic events of the enterprise that get recorded

Event between company and outside enterprise