AAN Associates
Financial Policies & Procedures Manual
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Section 5 Accounting Policies Effective Date
Sub Section 5.1 Definitions Page Number 1 total 1
Revision Revision Date
1. Definitions
Asset – is a resource controlled by the entity as a result of past events and from which future
economic benefits are expected to flow to the entity.
Liability – is a present obligation of the entity arising from past events, the settlement of which is
expected to result in an outflow from the entity of resources embodying economic benefits.
Equity – is the residual interest in the assets of the entity after deducting all its liabilities.
Income – is increase in economic benefits during the accounting period in the form of inflows or
enhancements of assets or decrease of liabilities that result in increase in equity, other than those
relating to contributions from equity participants. Income encompasses both revenue and gains.
Revenue – Revenue arises in the course of the ordinary activities of an entity and is referred to as
sales and commission etc.
Gains – represent other items may or may not, arise in the course of the ordinary activities such as
gain arising on disposal of non-current assets, etc. Gains are reported net of related expenses.
Expenses – are decreases in economic benefits during the accounting period in the form of outflows
or depletions of assets or incurrence of liabilities that result in decreases in equity, other than those
relating to distributions to equity participants.
Accounting records – The records of initial accounting entries and supporting records, such as
records of electronic fund transfers; invoices; contracts; the general and subsidiary ledgers, journal
entries and other adjustments to the financial statements that are not reflected in formal journal
entries (such as consolidating adjustment, report combination and reclassifications); and records
such as work sheets and spreadsheets supporting cost allocations, computations, reconciliations and
disclosures.
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