Class Notes and Questions

 What is an asset?
o present economic resource
o controlled by an entity
o because of past events
o from which future economic benefits will flow in to the entity
 What is a liability?
o present obligation
o to transfer economic resources
o arising from past events
o settlement is expected to result in an outflow of resources
 What is an equity?

The residual value after liabilities are subtracted from assets

 What is an income?
 What is an expense?
 What is the recognition criteria?
o Probable economic benefits will flow
o Can be reliably measured
 What are the fundamental qualitative characteristics?
o Relevance: Predictive and confirmatory value.
o Faithful Representation: complete, neutral and free from error.
o Substance over form
 What are the enhancing qualitative characteristics?
o Comparability
o Verifiability
o Timeliness
o Understandability