alleryStart learning →Which three elements did Brother Luca Pacioli define as the main accounting elements?
ARevenues, expenses and net profit
BCash, inventory and receivables
CJournals, ledgers and trial balances
DAssets, liabilities and owners equity
Answer & Solution
Correct answer: D. Assets, liabilities and owners equity
1. Today's accounting procedures rest on those developed in the late 15th century by the Italian monk Brother Luca Pacioli.
2. He defined three main accounting elements: assets, liabilities and owners' equity.
3. Assets are things of value owned by a firm, liabilities are what it owes its creditors, and owners' equity is the investment in the firm minus any liabilities.
4. Revenues and expenses belong to the income statement, and journals and ledgers are records rather than elements of the accounting equation.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 14 "Using Financial Information and Accounting", section 14.3 Basic Accounting Procedures_
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