The document defines key accounting elements including assets, liabilities, and owner’s equity, emphasizing their relationships and impact on financial statements. Assets are resources controlled by an entity expected to bring future economic benefits, while liabilities represent obligations leading to resource outflows. Revenue is characterized by inflows of economic benefits, whereas expenses are defined as reductions in assets or increases in liabilities.

1. Accounting Elements

2. Assets Resources controlled by an entity as the result of past events from which future economic benefits are expected to flow.

3. Liabilities Present obligations of the entity arrising from events, the settlement of which is expected to result in an outflow of resources embodying economic benefit

4. Owner’s Equity The residual value of assets of a business less the liabilities of a business. An increase in assets increases owner’s equity. An increase in liabilities decreases owner’s equity.

5. Revenue Inflows of future economic benefit in the form of increases in assets or decreases in liabilities other than contributions made by the owner.

6. Expenses Sacrifices of future economic benefit in the form of reduction in assets or increases in liabilities during the reporting period, other than withdrawals by the owner.