ACCA Applied Knowledge · Financial Accounting · The main elements of financial statements
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. An economic resource is a right with the potential to produce economic benefits. Obligations are liabilities, and the residual interest is equity.
- AA present economic resource controlled by the entity as a result of past eventsCorrect
- BA present obligation of the entity to transfer an economic resource as a result of past events
- CA residual interest in the entity's net resources after deducting liabilities
- DAn increase in economic benefits during the period resulting in increases in 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 describes a liability, the third describes equity and the fourth describes income.
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