Definitions

Question 1

What does articulation mean to financial statements?

Answer 1

They are fundamentally interrelated.

Occurs in two ways:

1) beginning balance + changes = ending balance
2) assets = liabilities + equity

i.e double entry accounting or debits = credits

Question 2

What is the definition of expenses?

Answer 2

Outflows or other using up of assets or incurrences of liabilities (or a combination of both) from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity’s ongoing major or central operations.