Question

6. Which of these basic elements of financial statements arises from peripheral or incidental transactions? A. Liabilities B. Expenses C. Assets D. Gains

Answer 1

A transaction is a process or can say an instance of buying or selling of goods or services with some consideration. In accounting the transactions and the events forms an basis and are recorded as an assets , liabilities, expenses , gains and losses.

When the item provides future benefits then it is termed as assets, and when due to past or present event an obligation to pay arises then it becomes the liabilities. Here expenses are the result of the operations or activities within the organisation.

The financial statements involves the collection of revenue expenses assets and liabilities but when say that the basic elements which arises from the transaction or events the outcome of it is the gains and losses.

Here the option loss is not there so gain will be the correct Option. i.e basic elements of financial statements arises from peripheral or incidental transactions is Gains.

Thus the correct Option is-------------D i.e Gains