the accounting elements

Question 1

what are the accounting elements

Answer 1

• assets
• liabilities
• revenue
• expense
• owner’s equity

Question 2

define assets. Both current and non-current.

Answer 2

An asset is a present economic resource controlled by the entity as a result of past events.

Current assets are cash and other types of assets held primarily for the purpose of sale or trading, or are reasonably expected to be converted to cash, sold or consumed by a business within 12 months after the end of the reporting period.

Non-current assets are expected to be used by the business entity for a number of years and are not held for resale.

Question 3

define liabilties. both current and non-current.

Answer 3

A liability is a present obligation of the entity to transfer an economic resource as a result of past events.

Current liabilities are obligations of the entity that are reasonably expected to be settled within 12 months after the end of the reporting period.

Non-current liabilities are obligations of the entity that are not required to be settled within 12 months after the end of the reporting period.

Question 4

define revenue.

Answer 4

Revenues are increases in assets or decreases in liabilities that result in increases in owner’s equity, other than those relating to contributions from the owner.

Question 5

define expenses.

Answer 5

Expenses are decreases in assets or increases in liabilities that result in a decrease in owner’s equity, other than those relating to distributions to the owner.

Question 6

define owner’s equity.

Answer 6

Owner’s equity is the residual interest in the assets of the entity after deducting all its liabilities.