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ACCA Applied Knowledge · Financial Accounting · Key principles and concepts of accounting

Under the IASB Conceptual Framework, which of the following is the definition of an asset?

An asset is a present economic resource controlled by the entity as a result of past events. The other options describe a liability, equity and income respectively, so they do not define an asset.

  1. AA present economic resource controlled by the entity as a result of past eventsCorrect
  2. BA present obligation of the entity to transfer an economic resource as a result of past events
  3. CThe residual interest in the entity after deducting all its liabilities
  4. DAn increase in economic benefits during the period that results in higher equity

Explanation

The Conceptual Framework defines an asset as a present economic resource controlled by the entity as a result of past events. The second option is the definition of a liability, the third is equity, and the fourth describes income.

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