For depreciation you would choose 'outflow/consumption of economic benefits' because the non-current assets ability to generate revenue decreases as it is consumed. You can also refer to the next part of the definition to be certain, that is, it leads to a decrease in assets (Accumulated Depreciation, which is a negative asset), thus reducing owner's equity (as it is an expense and reduces net profit).
You would use 'reduction in inflows' for something like discount expense, as there is less cash received cash received from debtors.
For revenues you'd use 'saving in outflows' for items such as discount revenue, as less cash is being paid to the creditor as a result of early repayment. Interest revenue is an item you would describe with 'inflow of economic benefits' as it leads to an increase in assets (bank) and owner's equity.
Sorry it's a little rushed, but I hope that helped haha
I know this seems like such an obvious answer but really dissect what the expense is doing to the accounting equation. Something like depreciation is ( in simple terms ) reducing the value of our assets ( technically its not but just go with this for now ) so we are losing economic benefit. However, with something like discount expense, you are not receiving the amount you expected back hence it is a reduction in revenue.
lol abcxyz beat me to it but yeah pretty much think about the accounting elements and you will be fine.
Thanks so much! I get it now, your explanations definitely helped
Is
outflow of economic benefits and
consumption of economic benefits the same? Can they be used interchangeably?
Also, depreciation doesn't actually decrease the
value of the asset, right? It just increases the negative asset, accumulated depreciation, which decreases assets overall?
And is discount expense the only expense that is a "reduction in inflows..."? Likewise, is discount revenue the only revenue item that is "savings in outflows...?"
Thanks again