Elements - Definitions - achieved

Question 1

What is the definition of an asset?

Answer 1

A resource controlled PRESENTLY by the entity as a result of PAST events and from which FUTURE ECONOMIC BENEFITS are expected to flow.

Remember P.P.F

Question 2

What s the definition of a liability?

Answer 2

Liabilities are PRESENT obligations of the entity arising from PAST events, the settlement of which is expected to result in an outflow of FUTURE ECONOMIC BENEFITS

Remember P.P.F

Question 3

What is the definition of owners equity?

Answer 3

Equity is the residual interest in the assets of the entity after deducting all its liabilities

Remember EQ = A - L

Question 4

What is the definition of income?

Answer 4

Increases in economic benefits during the accounting period in the form of inflows of assets (or decrease in liabilities) that result in increases in equity, other than those relating to contribution from owners

Remember i,i,i,i,NC

Question 5

What is the definition of expense?

Answer 5

Decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or (incurrences in liabilities) that result in decreases in equity

Remember D,D,D,D,ND