2. Elements of Financial Statements

What are assets?

A present right of an entity to an economic benefit

What are liabilities?

A present obligation of an entity to transfer an economic benefit.

What is equity (or net assets)

Called shareholders’ equity or stockholders’ equity for a corporation, it is the residual interest in the assets of an entity that remains after deducting its liabilities.

What is investments by owners?

Increases in equity of a particular business enterprise resulting from transfers to it from other entities of something of value to obtain or increase ownership interests in it.

What are distributions to owners?

Decreases in equity of an entity resulting from transferring assets, rendering services, or incurring liabilities by the entity to owners.

What is comprehensive income?

The change in equity of a business enterprise during a period from transactions and other events and circumstances from nonowner sources. It includes all changes in equity during a period except those resulting from investments by owners and distribution to owners.

What are Gains?

Increases in equity (net assets) from transactions and other events and circumstances affecting an entity except those that result from revenues or investments by owners.

What are losses?

Decreases in equity (net assets) from transactions and other events and circumstances affecting an entity except those that result from expenses or distribution to owners.