7/30/2019 ACCT5001 S1 2010 Week 13 Self-Study Solutions
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ACCT5001 S1 2010 Self-Study Solutions Week 13
ACCT5001 S1 2010 Week 13 Self-Study Solutions.doc 30/05/2010
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versus benefits. An important consideration is the costs versus
benefits of financial
information. Preparers and standard setters seek to ascertain
that the costs of preparing
certain financial information are not greater than the benefits
to be derived from using that
information.
The definitions of asset, liability, equity, income and expense
are also outlined in the
Framework. Assets are defined in the Frameworkas a resource
controlled by the entity as
a result of past events and from which future economic benefits
are expected to flow to the
entity (paragraph 49(a)). A liability is defined in the
Frameworkas a present obligation of
the entity arising from past events, the settlement of which is
expected to result in an outflow
from the entity of resources embodying economic benefits
(paragraph 49(b)). Equity is
defined in the Frameworkas the residual interest in the assets
of the entity after deducting
all its liabilities (paragraph 49(c)). Income is defined in the
Frameworkas increases in
economic benefits during the accounting period in the form of
inflows or enhancements of
assets or decreases of liabilities that result in increases in
equity, other than those relating to
contributions from equity participants (paragraph 70(a)).
Finally, expenses are decreases
in economic benefits during the accounting period in the form of
outflows or depletions of
assets or incurrences of liabilities that result in decreases in
equity, other than those relating
to distributions to equity participants (paragraph 70(b)).
