Financial statement elements

Question 1

What is an asset?

Answer 1

An asset is a resource controlled by the business entity
As a result of past events
and from which future economic benefits are expected to flow to the entity.

Question 2

What is a Liability

Answer 2

A liability is an obligation of the entity arising from past events,
the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits.

Question 3

What is equity

Answer 3

Equity is the residual interest in the assets of the entity after deducting all its liabilities. The accounting equation is aptly written as A - L = EQ

Question 4

What is income

Answer 4

Income is increases in economic benefits during the accounting period
in the form of inflows or enhancements of assets or decreases in liabilities that results in increases in equity,
other than those relating to contributions from equity participants

Question 5

What is an expense

Answer 5

Expenses are decreases in economic benefits during the account period
in the form of outflows or depletions of assets or in currencies of liabilities that result in decreases of equity,

other than those relating to distributions to equity participants