Answer to Question #131777 in Accounting for Vivian Miza

Question

What is element of financial statement

Answer 1

Elements of financial statements refers to the main components that build up the financial statements. For example, the balance sheet is made up of three main elements which are Assets, Liabilities and Equities. The income statement on the other hand is made up two key elements which are Revenues and Expenses.

1. Assets- These are properties owned by the business that enable it to carry out its operations. Economic benefits are expected to be drawn to the firm from these assets
2. Liabilities- These are obligations payable to other businesses or individuals. They result to an outflow of money from the business in future.
3. Equities- This refers to the amount of investment put into a business plus any retained earnings
4. Revenue- This is the income generated by a business from sale of products or provision of services
5. Expenses- These are the costs incurred by the business in order to generate its revenue.