General Knowledge Flashcards
Define Assets
An asset is an economic resources under the control of an entity, which have the potential to produce economic benefits.
Define Current Assets
Current assets are cash and other types of assets held primarily for the purpose of sale or trading, or are reasonably expected consumed withing the next 12 months of the reporting period.
CA Example
Cash on hand, cash at bank, inventory or accounts receivable
Define Non-Current Asset
Assets that are expected to be used for a number of years, which are not held for the primary purpose of resale.
NCA Example
Vehicles, office furniture or shop fittings
Define Liabilities
Liabilities are obligations to transfer economic resources to another entity.
Define Current Liabilities
Obligations to be settled within 12 months from the end of the current reporting period.
CL Examples
GST owing, accounts payable, bank overdrafts or short term loans
Define Non-Current Liabilities
Obligations that don’t need to be settled within the 12 month of the current reporting period.
NCL Example
Long term loan
Define Owner’s Equity
Owner’s Equity is the residual value of the assets of an entity after deducting all its liabilities.
Accounting Equation
Assets = Liabilities + Owner’s Equity
Revenue
Revenue is an increase in assets, or decrease in liabilities, that result in an increase in owners equity.
Expenses
Expenses is a decrease in assets, or an increase in liabilities, that results in an decrease in owner’s equity.
Qualitative Characteristics
Relevance, faithful representation, comparability, verifiability, timeliness and understandability
