Asset:

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Asset:

A resource controlled by the entity as a result of a past event that is invoice/receipt/contract/statement, and from which future economic benefits are expected to flow to the entity for example the company can use blank for... .

Liability:

A present obligation of the entity arising from past events I.e. when the company bought... they are obligated to repay..., the settlement is expected to result in an outflow from the entity of resources embodying economic benefit I.e. the company is unable to spend the money on other operations that could generate economic benefit.

Equity:

The leftover value in assets of the entity after deducting all its liabilities.

Revenue:

An increase in economic benefit in the form of inflows or enhancement of an asset (or a decrease in liabilities) for example example is an inflows/enhancement which increases/decreases (account), that results in $ decrease in profit and thereafter equity, not involving contributions by equity participants.

Expense:

A decrease in economic benefit in the form of outflows or depletion of assets (or increase in liabilities) for example example is an outflow/depletion which increases/decreases (account), that results in a $ increase/decrease in profit and thereafter equity, not involving withdrawals to equity participants.

Going concern:

The financial statements are prepared on the assumption that an entity will continue to operate into the foreseeable future.

It is therefore assumed that the entity does not have the intention of liquidation or the need to liquidate (I.e. sell all assets into a liquid or cash form). Therefore assets can be stated at historic costs and are not required to be stated at the market value that an urgent sale would generate.

Timeliness:

Having information that can influence decisions available to decision makers in time.

Preparing end-of-year financial statements within a few months so decisions can still be made on changes for the following year.

Relevance:

Relevant information can make a difference to the decisions users make.

Recording buildings at their net realisable value rather than their historic cost could have a large impact on the value of assets and therefore the equity of a company. This might influence a potential investor as to whether to buy the company's shares.

Comparability:

Information is useful if it can be compared with that of other entities and periods.

Investors comparing the Income Statement profit from one year to prior year to see if improvements were made.

Ensuring the same accounting methods for depreciation are used form one year to the next.

Verifiability:

Two or more knowledgeable people could reach the same agreement concerning how to treat a certain situation.

Two auditors verifying the quantities and costs of inventory during a stock take using the same method, such as 'weighted average'.

Faithful representation:

Financial information must represent what it purports to represent.

To provide faithful representation the information should be complete, neutral and free from error. A faithful representation must also consider whether the information represents a true and fair view.

Understandability:

Classifying, characterising and presenting information so it is clear and concise.

However, complex information is not to be excluded, because it is assumed users will have reasonable knowledge of a business and will review the information dilligently.

Removing three zeros from numbers in the annual report so the statements are free from clutter, making the statements easier to understand.

Accrual basis:

The effects of the transaction are to be shown in the periods of which those effects occur, even if the resulting cash receipts or payments occur in another period.

Recognition criteria:

It is highly likely the entity will use blank for blank. When blank is sold slash charged to customers, cash will be received.

The value of the blank can be measured reliably by referring to blank which shows blank.

Capital expenditure:

The purchase of an item that will be used for more than one accounting period to produce economic benefit.

The costs to deliver the item to the business and get it ready for use is also to be included into the value of the asset.

An entity might buy blank and then spend money on blank, blank and a training session for staff. All of this expenditure is either the purchase of an asset, or the money spent getting blank ready for use, therefore it is all to be included in the cost of asset name.

Revenue expenditure:

is day-to-day expenditure that benefits the business for a period of less than 12 months.

It could also be spending on maintenance to get an asset up to its original condition.

The expenditure is often regular and ongoing and is necessary to keep the asset operation on a daily basis.

Buying blank for entity is revenue expenditure. Also if maintenance happened each year, the maintenance would only get it back to its original condition rather than improving the asset in the long term, so this would also be classed as revenue expenditure.