Assets are one of the five financial statement elements, although our resources consider them in the broader sense of anything that’s valuable.
This is more helpful to students than starting with the definitions set out in the conceptual frameworks of the regulators.
The elements of financial statements are the building blocks of financial statements. If your students understand what the elements are then they have a good basis for understanding how events are reported in financial statements. Those elements – assets, liabilities, equity, income and expenses – are key to understanding financial…Read more
Read more The battle to remove “prepayments” from accounting vocabulary is probably not winnable, but we can help our students by being clear about how we describe them.
Read more Goodwill represents those ‘unidentified flying assets’ that can’t be individually identified. Goodwill is one of those slippery concepts that accounting students can find confusing. Accounting for goodwill brings the student in front of a number of difficult questions and misconceptions in accounting, such as the nature of an asset and…Read more
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With gratitude to Paul Jennings for this clever idea. Some students find it difficult to appreciate that assets are rights, not things in and of themselves. I used to tell students that in the old days we put motor vehicles on balance sheets but they kept falling off. It didn’t…Read more
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