The Accounting Elements

Question 1

Liability

Answer 1

A present obligation of the entity as a result of events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits

Question 2

Revenue

Answer 2

An inflow of economic benefits in the form of an increase in assets that reduced owner’s equity, except for capital contributions by the owner

Question 3

Expense

Answer 3

An outflow or consumption of economic benefits in the form of a decrease in assets that reduces owner’s equity , except for drawings by the owner

Question 4

Asset

Answer 4

A resource controlled by an entity, as a result of past events, from which future economic benefits are expected to flow to the entity