Q: Describe the five elements of financial position in detail.

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Expert Solution

1. Assets- Are the properties which helps in generating revenue for the enterprise. As per IASB assets are resources controlled by enterprise as a result of past events and from which future economic benefits are expected to flow to the entity. They may be Current aseeAsor non current assets.

2. Liabilities- means present obligations arising out of past events and the settlement of these obligations would result in cash outflows from the entity. These may be Current liabilities or non current liabilities.

3. EQUITY- The net residue of assets remaining after the settlement of all liabilities is known as equity. (Or amount remaining after realising assets and paying all the liabilities)

4. Revenue- the amount generated by the enterprise form it's principal revenue generating activities. Eg Sales of goods/Services

5. Expenses- the amount of expenditure incurred during the year to generate revenue is known as the expense.

ekkarill92 answered 1 year ago

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