Elements Of Financial Statements

Chapter One

Assets

Present rights of an entity to economic benefits

Liabilities

Present obligations of an entity to transfer economic benefits

Equity/ Net Assets

The residual interest in the assets of an entity that remains after deducting its liabilities

Investment By Owners

Increases in equity of an entity resulting from transfers to the entity from other entities of something valuable to obtain or increase ownership interests in the entity

Distribution to Owners

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

Comprehensive Income

The change in equity of a business entity 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 distributions to owners

Revenues

Inflows or other enhancements of assets of an entity or settlements of its liabilities from delivering or producing goods, rendering services, or carrying out other activities

Expenses

Outflows or other using up of assets of an entity or incurrences of its liabilities from delivering or producing goods, rendering services, or carrying out other activities

Gains

Increases in equity from transactions and other events and circumstances affecting an entity, except those that result from revenues or investments by owners

Losses

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

Which category of elements in the financial statements does retained earnings belong to?

Equity

Which category of elements in the financial statements does sales revenue belong to?

Revenues

Which category of elements in the financial statements does additional paid-in capital belong to?

Equity (Investments by Owners)

Which category of elements in the financial statements does inventory belong to?

Assets

Which category of elements in the financial statements does depreciation belong to?

Expenses

Which category of elements in the financial statements does loss on sale of equipment belong to?

Losses

Which category of elements in the financial statements does interest payable belong to?

Liabilities

Which category of elements in the financial statements does dividends belong to?

Equity ( Distributions to Owners)

Which category of elements in the financial statements does gain on sales of investment belong to?

Gains

Which category of elements in the financial statements does issuance of common stock belong to?

Equity (Investments by Owners)

What element is associated with: Decreases in equity except those that result from expenses or distributions to owners

Losses

What element is associated with: Obligation to transfer over economic benefits

Liabilities

What element is associated with: Increases in ownership interest

Investments by Owners

What element is associated with: Declares and pays cash dividends to owners

Distributions to Owners

What element is associated with: Increases in net assets in the period from nonowner sources

Comprehensive Income

What element is associated with: Items characterized by service potential or future economic benefit

Assets

What element is associated with: Equal increase in assets less liabilities during the year, after adding distributions to owners and subtracting investments by owners.

Comprehensive Income

What elements are associated with: Arises from income statement activities that constitute the entity’s ongoing central operations

Revenues and Expenses

What element is associated with: Residual interest in the assets of the enterprise after deducting its liabilities

Equity

What element is associated with: Increases in assets during a period through sale of a product

Revenues

What element is associated with: Includes all changes in equity during the period, except those resulting from investments by owners and distributions to owners

Comprehensive Income