Elements of Financial Statements

ADS Elements of Financial Statements
SFAC 6 defines 10 elements of financial statements. These elements are “the building blocks with which financial statements are constructed the classes of items that financial statements comprise.” 42 They focus directly on items related to reporting financial position and measuring performance. The accrual accounting model actually is embodied in the element definitions.

1. Assets Probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or event
2. Liabilities Probable future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or event
3. 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. 
4. 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
5. Distributions to owners Decreases in equity of a particular enterprise resulting from transfers to owners. 
6. 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 distributions to owners
7. Revenues Inflows or other enhancements of assets of an entity or settlements of its liabilities during a period from delivering or producing goods, rendering services, or other activities that constitute the entity’s ongoing major or centraloperations. 
8. Expenses Outflows or other using up of assets or incurrences of liabilities    during a period from delivering or producing goods, renderingservices, or other activities that constitute the entity’s ongoing major or central operations
9. Gains Increases in equity from peripheral or incidental transactions of an entity 
10. Losses Represent decreases in equity arising from peripheral or ncidental transactions of an entity

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