Summary Good notes for ACCF111 tests

Introduction:
Definition of elements:
Assets:
 Present economic resources
o Is a right
o Produce economic benefits
 Controlled by entity
o Economic resource use
o Benefits flow from the resource
 Result of past events

Liabilities:
 Present obligation of entity
o Is a right duty and responsibility of an entity and need to
avoid
 Transfer economic resources
 Result of past events

Income:
 Increase A, Decrease L
 Increase E
 Other than relating to contributions from shareholders of equity
claims

Expenses:
 Increase L, Decrease A
 Decrease E
 Other than relating to contributions from shareholders of equity
claims

Equity:
 E=A-L

Conceptual Framework:
Underlying assumptions:
 Going concern: implies that it is assumed that at all times that the
entity will exist in the foreseeable future.
 Accrual basis: All transactions are recorded when they occur did not
when cash is received or paid.