CIMA F1 Syllabus B. Financial Statements - Chapter 4—The Elements Of Financial Statements - Assets & Liabilities - Notes ^{5 / 10}

The main focus of this chapter is on the definitions of assets, liabilities, and equity as well as income and expenses.

The definitions are quoted below:

1. Asset

   A present economic resource controlled by the entity as a result of past events. 

   An economic resource is a right that has the potential to produce economic benefits.

2. Liability

   A present obligation of the entity to transfer an economic resource as a result of past events.

3. Equity

   The residual interest in the assets of the entity after deducting all its liabilities.

4. Income

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

5. Expenses

   Decreases in assets or increases in liabilities that result in decreases in equity, other than those relating to distributions to holders of equity claims.