Elements - Definitions

Question 1

Define an asset

Answer 1

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

Question 2

Define 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 PPF

Question 3

Define owners equity

Answer 3

Equity is the residual interest in the assets of the entity after deducing all its liabilities. REMEMBER Eq=A-L

Question 4

Define income

Answer 4

Increases in economic benefits during the accounting period in the for of inflows of assets (or decreases in liabilities) that result in increases in equity, other than those relating to contributions from owners. REMEMBER I,I,I,I,NC

Question 5

Define expenses

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, other than those relating to distributions to owners. REMEMBER D,D,D,D,ND