Question

Name and explain the four elements of financial Statement

Answer 1

Solution:-

The elements of financial statements are the general groupings of line items contained within the statements. the statements. These elements are as follows:

• Assets: These are items of economic benefit that are exepected to yeild benefits in future periods. Examples are accounts receivable, inventory, and fixed assets.
• Liabilities: These are legally binding obligations payable to another entity or individual. Examples are accounts payable, taxees payable, and wages payable.
• Equity: This is the amount invested in a business by its owners, plus any remaining retained earnings.
• Revenue: This is an increase in assets or decrease in liabilities caused by the provision of services or products to customers. It is a qualification of the gross activity generated by a business. Examples are product sales and service sales.

Of these elements, assets, liabilities, and equity are included in the balancesheet. Revenues and expenses are included in the income statement. Changes in the elements are noted in the statement of cash flows.