Defintions and Crtieria Recognition of Accounting Terms Flashcards
Accounting Equation?
A=L+Eq
Criteria for Recognition of Assets
-i t is probable that the future economic benefits embodied in the asset will eventuate; and
-the asset possesses a cost or other value that can be measured reliably.
Defintion of Equity
“Equity” is the residual interest in the assets of the entity after deduction of its liabilities.
Definition of Assets
“Assets” are future economic benefits controlled by the entity as a result of past transactions or other past events.
Definition of Liablitilites
“Liabilities” are the future sacrifices of economic benefits that the entity is presently obliged to make to other entities as a result of past transactions or other past events.
Criteria for Recognition of Laiblities
-it is probable that the future sacrifice of economic benefits will be required; and
-the amount of the liability can be measured reliably.
Defintion of Revenue
“Revenues” are inflows or other enhancements, or savings in outflows, of future economic benefits in the form of increases in assets or reductions in liabilities of the entity,
Crtieria for Recognition of Revenue
-it is probable that the inflow or other enhancement or saving in outflows of future economic benefits has occurred; and
-the inflow or other enhancement or saving in outflows of future economic benefits can be measured reliably.
Defintion of Expenses
Expenses” are consumptions or losses of future economic benefits in the form of reductions in assets or increases in liabilities of the entity, other than those relating to distributions to owners, that result in a decrease in equity during the reporting period.
Criteria for Recognition of Expenses
-it is probable economci loss resulting in a reduction in assets and/or an increase in liabilities has occurred; and
-the consumption or loss of future economic benefits can be measured reliably
