BRIDGE TO THE PROFESSION
Recording transactions in the accounting system requires knowledge of the important characteristics of the elements of financial statements, such as assets and liabilities. In addition, accountants must understand the inherent uncertainty in accounting measures and distinctions between related accounting concepts that are important in evaluating the effects of transactions on the financial statements.
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(a) The three essential characteristics of assets.
(b) The three essential characteristics of liabilities.
(c) Uncertainty and its effect on financial statements.
(d) The difference between realization and recognition.