Definition of Elements of Financial Statements

The elements of financial statements are the classes of items contained in the financial
statements.
Examples of Elements of Financial Statements
The elements of the financial statements include:
 Assets. Things that are resources owned by a company and which have future
economic value that can be measured and can be expressed in dollars.
Examples include cash, investments, accounts receivable, inventory, supplies,
land, buildings, equipment, and vehicles.
 Liabilities. Liabilities are obligations of the company; they are amounts owed to
creditors for a past transaction and they usually have the word "payable" in their
account title. Along with owner's equity, liabilities can be thought of as
a source of the company's assets.
 Equity or net assets. In finance, net assets refers to the value of a company's
assets minus its liabilities. For individuals, the concept is the same as net worth.
 Investments by owners. Owner investment, also called owner’s investment or
contributed capital, is the amount of assets that the owner puts into the company.
In other words, this is the amount of money or other assets that the owner
contributes to the business either to start it or to keep it running.
 Distributions to owners. A distribution to owners is a payment of the retained
earnings of a business to its owners. This distribution may be made in a smaller
company because there is no other way for the owners to gain value from the
enterprise, as would normally be achieved through the sale of stock or sale of the
business. This distribution results in a reduction of the equity and assets of the
business. The distribution is usually made in cash, though it can also be made
using any other asset of the business.
 Comprehensive income. Comprehensive income is the variation in a company's
net assets from non-owner sources during a specific period. Comprehensive
income includes net income and unrealized income, such as unrealized gains or
losses on hedge/derivative financial instruments and foreign currency transaction
gains or losses. Comprehensive income provides a holistic view of a company's
income not fully captured on the income statement.
 Revenues. Fees earned from providing services and the amounts of
merchandise sold. Under the accrual basis of accounting, revenues are recorded
at the time of delivering the service or the merchandise, even if cash is not
received at the time of delivery. Often the term income is used instead of
revenues.
 Expenses. The cost of maintaining property or generating income.
 Gains. A gain may be realized for many different reasons. An excess of money or
fair value of property received on sale or exchange of an asset is considered to
be a gain. A gain may also be recognized when any type of financial instrument
is sold for more than its purchase price.
 Losses. Losses can result from a number of activities such as; sale of an asset
for less than its carrying amount, the write-down of assets, or a loss from
lawsuits.