Elements-Definitions

Question 1

What is the definition of 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

What is the definition of 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

Question 3

What is the definition of owners equity?

Answer 3

Equity is the residual interest in the assets of the entity after deducting all its liability.

Remember EQ=A-L

Question 4

What is the definition of Income?

Answer 4

Increases in economic benefits during the accounting period in the form 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

What is the definition of expenses?

Answer 5

Decreases in economic benefits during the accounting period in the form of outflows or depressions of assets (or incurrences in liabilities) that result decreases in equity, other than those relating to distributions to owners.

Remember DD,D,D,ND