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Chapter 1
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9.2 Definitions – as per the IASB Conceptual Framework for
Financial Reporting.
Asset – A resource owned or controlled by an entity used to generate
future economic benefits.
Liability – An entities obligation to transfer economic benefits as a
result of past transactions or events.
Capital/Equity – A special kind of liability which shows the net amount
invested in the business by the owner(s) and what is due to them if the
business was terminated.
Income – This is the recognition of the inflow of economic benefits
during an accounting period to the business. For most businesses, this
will be sales revenue.
Expense – This is the recognition of the outflow of economic benefits
during an accounting period. This may occur when purchasing goods
for resale or by incurring business running costs.
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