Skip to main content

Recognising your assets, liabilities, income and expenses

Hello readers, so today I will be writing about assets, liabilities, income and expenses. The IFRS framework states that before any item can be identified, it must meet the definition of an asset, liabilities, income and expenses. You must also have enough proof that a change as occurred in your assets or liability. It must also be measured in monetary terms. 

There are some situations whereby you can recognise an income even when you have not received it. For example it could take a project a long time to complete, income should be recognised when you execute a part of the project. The further you execute the project the more income you can recognise. I will advise you not to wait till the end of the project before you start asking for your money, read this article.

According to the IFRS " an asset is a resource controlled by an entity, as a result of a past event from which future economic benefit are expected to flow to the entity". As such,  an item is  recognised as an asset when it is likely that a future economic benefit will flow into your organisation as  a result of controlling the item. You do not need to own an item before you can call it your asset, you just have be in control of the item (nothing can happen without Allah's Permission). It must be able to be measured reliably in monetary terms.

According to IFRS "a liability is a present obligation of the entity arising from past event, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefit. As such, a liability should only be recognised when your company has an obligation to give out economic benefit due to a past event. It must also be able to be measured reliably in monetary terms.

Income is an inflow of economic benefit as a result of an increase in an asset or decrease in liability. It can only be recognised when the above occurs and it can be measured reliably in monetary terms. The inflow of economic benefit happens during the day to day activities of the organisation.

An expense on the other hand, is an outflow of economic benefit as a result of an increase in liability or a decrease in asset. Thus, an expense can be recognised when the above happens and it can be measured reliably in monetary terms. The outflow of economic benefit also happens during the day to day activities of an organisation. 

That is all for today. Thank you for reading this article. Keep checking out my blog regularly. Cheers!


Popular posts from this blog

Work-life balance: all should attain it

Hello readers, today I will be writing about work-life balance. According to, work-life balance "is a comfortable state of equilibrium achieved between an employee's primary priorities of their employment position and their private lifestyle." All work and no play makes Jack a dull boy, thus, you should find a balance between work and play. Here are some tips to help you achieve it.
1. Do not check your email (work) after working hours, this will help improve the quality of time you spend with your family and friends. Thus, you should not be distracted by work when spending time with your family and friends. 
2. When you decide to improve the situation of your work life balance, take it one step at a time. For example if you do not get to spend time in the evenings with your family during the week days due to coming back late from work, you should decide to spend one day a week and gradually increase it to two and then three till you get to spend the…

Eid Mubarak

The world of competence

Hello readers, it has been a while. Hope you did not miss me much, the good news is I am back now. Today, I will be writing about competence.
Competence is the ability that enables a company or an individual to deploy its resources effectively. It is neccessary for a company to have a competence target in all its business activities so as to deliver value to its customers. This will help create a competitive advantage for the company.
Competencies must provide value to customers. It must be unique or able to develop greatly or be better than that of competitors. New products and services must be able to be developed as a result of the competence. It must be difficult for other competitors to obtain or imitate.
Continually producing high quality products can make a company become a market leader (which is a core competence) as it provides a company with a competitive advantage. With high quality, higher prices can be demanded by the company from customers and the company will also be able…