Question

List all the elements of financial statements, then briefly describe each one, indicate how each show increases and decreases of themselves, and finally, give one example of each definition [element].

Answer 1

Below are the list of elements of financial statemnets and other detailsL

Elements	Sub types	Meaning	Increase/Decrease	Examples
Assets		Assets are the property/belongings/possessions/legal rights owned by a business which has future economic value.	It increases in business equity	Plant and Machinery, Goodwill, Cash and equivalent, Inventory, Accounts Receivable
	Fixed Assets	Fixed assets are the property which is mainly use for running business and it does not easily convert into cash, its benefits for longer period. It includes tangible and intangible assets
	Current Assets	Current assets are assets easily convert into cash and it is realized in short term generally within a year
Liabilities		Liabilities are the amount which you owe to others including owner	It decreases in business equity	Accounts Payable, Bank debts, Taxes Payable
	Current Liabilities	Current Liabilities are payable in short term that is within a year
	Non - current Liabilities	Non - Current Liabilities are due over a long period of time
Equity		Equity is the owner's fund invested into business. Basically, it’s a difference between business assets and liabilities.	Equity's movements are based on company's performance and position of assets and liabilities	In company, shareholder own shares of stock . In business, amount contributed by owner for starting and/or running business
Revenue		Revenue is income generated through normal business operation. It is cash/assets inflows	It increases in owner's equity	Sales of Goods and services
Expenses		Expenses are amount spending to generated revenues in normal business course. Its cash outflow out of operations and overhead expenses	It decreases in owner's equity	Direct expenses like wages, Administrative Expenses like Salaries & wages, Rent, Advertising
Profit/Gains		When revenues are greater than expenses incurred, it indicates business is earning profits or gains	It can increase the equity either by adding to reserves or investing into assets or paying off liabilities	When income from sales greater than its operative expenses, Sale of assets for more than its book value.
Losses		When expenses incurred is more than income or outflows are more than inflows of fund is said to be losses	Equity is decrease due to losses	Sales of investments for less than its book value
Investment by owners		It is nothing but contribution by owner or proprietor to start business operation	Increase in equity	Personal assets bring into business
Distribution to owners		When owners withdraw fund from business it’s called distribution to owners	Decrease in equity	Profit sharing to partner, Cash withdrawals by owner of business
Comprehensive Income		It is unrealized gain or loss. It is accounted under Other Comprehensive income.	Increase in equity	Unrealized gains and losses from debt securities, Foreign currency transactions