accounting elements (topic 2) Flashcards
(6 cards)
1
Q
5 accounting elements
A
- Assets
- Liabilities
- Equity
- Income
- Expense
2
Q
CHECK IF NEED TO MEMORISE THE DEFINITION OF THESE ELEMENTS? OR JUST NEED TO KNOW THE DEFINITION CHECKLIST asset definition
A
a present economic resource controlled by the entity as a result of past events…an economic resource is a right that has the potential to produce economic benefits.
3
Q
Asset definition checklist
A
- An economic resource
- Controlled by the entity
- Potential to produce economic benefits
4
Q
Liability definition
A
a present obligation of the entity to transfer an economic resource as a result of past events.
5
Q
Liability definition checklist
A
- A present obligation
- Involving a transfer of an economic resource
- Arising from a past event
6
Q
Equity definition
A
- the residual interest in the assets of the entity after deducting all its liabilities
- Simple means: what is left over after taking liabilities away from assets.
