More accounting

The flashcards below were created by user Anonymous on FreezingBlue Flashcards.

  1. Define an asset.
    An asset is a resource embodying a future economic benefit that is controlled by an entity as a result of a past transaction.
  2. Define a liability.
    A liability is a present obligation of the entity arising from past events, the settlement of which will result in a future outflow of resources of the business.
  3. Define income.
    Income is an increase in economic benefits during the accounting period as a result of inflows or increases of assets or decreases of liabilities that increase the worth of the owner's investment (equity) other than those inflows relating to contribution by the owner to the business.
  4. Define an expense.
    An expense is a decrease in economic benefits of a business during the accounting period in the form of outflows of assets or increases in liabilities that have the effect of reducing the owner's equity other than the owner's drawings.
  5. Define equity.
    Equity is the residual interest in assets after the external liabilities have been subtracted.
Card Set
More accounting
Definitions of the elements of financial statements.
Show Answers