Plain English

jewels.pjewels.p Font Of All KnowledgeRegistered Posts: 1,774
A 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

I know what a liability is but it says in my book if asked in the exam explain three parts.

Can someone give me an easy explanation of " of resources embodying economic benefits"

Ta:001_smile:

Comments

  • A-VicA-Vic Expertise Guaranteed Registered Posts: 6,970
    jewels.p wrote: »
    A 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

    I know what a liability is but it says in my book if asked in the exam explain three parts.

    Can someone give me an easy explanation of "entity of recources embodying economic benefits"

    Ta:001_smile:

    lol had the exact conversation with my tutor about this as did a few others in my class.

    A liability is a present obligation (what you owe now) arising from past events (something you got before) the settlement of which (the payment) is expected to result (outcome) in an outflow (reduce cash) from the entity of resourses (sales) embodying economic benefits (reduction in profits)

    Think that explains it a little
  • A-VicA-Vic Expertise Guaranteed Registered Posts: 6,970
    All you have to do is think of it litertilly what does liability do to your profit
  • jewels.pjewels.p Font Of All Knowledge Registered Posts: 1,774
    It was the embodying economic benefits that got me. I googled it and it said "to invest with a body or spirit" WHAT?:laugh:
  • crispycrispy Trusted Regular SouthamptonRegistered Posts: 452
    This may sound very boring but I think it may be an idea to learn the IFRS definitions of Asset, Liability, Income, Expenses & Equity by rota for taking the exam. I know a question to define them came up when I did AAT and then also again when I took a CIMA financial paper (I wouldn't think you need to quote 100% exact word for word, but pretty much have it correct).

    Sorry if this advice seems boring, but being able to quote them may come in useful as they seem to appear so often.
  • jewels.pjewels.p Font Of All Knowledge Registered Posts: 1,774
    So if asked to define in the exam do we have to use all the fancy dancy words or can you just write it in simple terms?
  • jewels.pjewels.p Font Of All Knowledge Registered Posts: 1,774
    Sorry Crispy posted before I saw your post there
  • A-VicA-Vic Expertise Guaranteed Registered Posts: 6,970
    In the december exam we were asked just what the elements were and define them if am correct but it cant do you no harm to understand them as well.

    and yes sorry to say we did word for word
  • CriggersCriggers Feels At Home Registered Posts: 53
    In December it asked you define the parts of a balance sheet i think. Can't remember 100%. Either way, i didnt have a clue, my college never really encouraged us to learn the IAS stuff as it is always so minimal in the exam. I am now worried though that I found the DFS too easy and that those marks are going to bite me in the ass.

    So, make sure you learn them. Like you say, it is only some plain english to remember. The understanding is easy once you get rid of the silly OTT way it is written, I mean come on, you know what it is if you can create the statements in the first place don't you?
  • jewels.pjewels.p Font Of All Knowledge Registered Posts: 1,774
    A-Vic wrote: »
    In the december exam we were asked just what the elements were and define them if am correct but it cant do you no harm to understand them as well.

    and yes sorry to say we did word for word

    Ok will learn them word for word (and probably wont be asked that's what usually happens)
  • jewels.pjewels.p Font Of All Knowledge Registered Posts: 1,774
    Criggers wrote: »
    In December it asked you define the parts of a balance sheet i think. Can't remember 100%. Either way, i didnt have a clue, my college never really encouraged us to learn the IAS stuff as it is always so minimal in the exam. I am now worried though that I found the DFS too easy and that those marks are going to bite me in the ass.

    So, make sure you learn them. Like you say, it is only some plain english to remember. The understanding is easy once you get rid of the silly OTT way it is written, I mean come on, you know what it is if you can create the statements in the first place don't you?

    Yeah that's what I said I know what they all mean but not using the words used in IAS!:laugh:
  • A-VicA-Vic Expertise Guaranteed Registered Posts: 6,970
    gotta love google tho lol, try www.ask.com and type in the whole question :)
  • troytroy Trusted Regular Registered Posts: 275
    Alot of people failed this exam in June 09 as they explained an asset, when it asked for a 'current asset', please be warned, and do not get caught out by something simple like that. Remember this exams split is 70/30 between the two sections, so there is little room for error on the second section.
  • jewels.pjewels.p Font Of All Knowledge Registered Posts: 1,774
    Ok Thanks for all the replies
Sign In or Register to comment.