Business Management

An asset is a present economic resource
controlled by the entity as a result of past
events.
E.G., land and buildings, vehicles, bank
(favourable balance), inventory and trade
receivables

present obligation of
the entity to transfer an economic
resource as a result of past events.
E.G., long-term loans, bank

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

Income is increases in assets or
decreases in liabilities that result in
increases in equity, other than those
relating to contributions from holders
of equity claims

Expenses are decreases in assets or
increases in liabilities that result in
decreases in equity other than those
relating to distributions to holders of
equity claims

Indication of the financial state of
an organisation at a specific date.
Only items that meet the
definition of an asset, a liability
and equity.
The totals of these sections must
be equal to each other in order for
the statement to balance

Indication of the financial
performance of an
organisation over a period of
time.
Only items that meet the
definition of income and
expenses will be recognised in
the profit or los