Elements

Question 1

What is the Definition of an Asset?

Answer 1

Something which is controlled by the entity,
future economic benefit will flow to the entity
and is the result of a past event.

Question 2

What is the Definition of a Liability?

Answer 2

Something which is a present obligation of the entity,
future economic benefit will flow from the entity
and is the result of a past event.

Question 3

What is the Definition of Equity?

Answer 3

This represents the owners financial interest in the business. Calculated by Assets – Liabilities.
Remember. Eq = A - L

Question 4

What is the Definition of Income?

Answer 4

Any inflow which increases equity through either increasing assets or decreasing liabilities other than contribution by owner.

Question 5

What is the Definition of Expenses?

Answer 5

Any outflow which decreases equity through either decreasing assets or increasing liabilities other than drawings by owner.