Question

What are the different elements of notes in financial statements?Summarise what they mean.

Answer 1

Elements of a financial statements are the different classes of items and heads reported in a Financial statements.

Major elements of FS are as follows with their meanings:

Asset

Liability

Equity

Revenue

Expenses

Gains

Losses

Comprehensive Income

Investment by owners

Distribution to owners

Asset: Assets are the rights of the organisation by which they can conduct their business. Asset are which , the organisation owns by itself. They generally results in inflow of cash or services

Liability: Liabilities are the obligation upon the company, which the organisation needs to fulfil and it results is outflow of resources or services.

Equity: It's the owners money invested in the organisation.

Revenue: It is the money received due to conduct of normal couser of business like sale of goods or services. It refers to the inflow of money.

Expense: It is the outflow of money to conduct the business and make the products or services and market them.

Gains: When the difference between Revenue and Expense is positive it is our gain

Loss: When the difference between Revenue and Expense is negative, it results into loss

Comprehensive Income: Income generated not in Ordinary course of business.

Investment by Owners: It refers to the investment which the owners do in the other organisations to earn interest or control.

Distribution to owners: It is also called as dividend and refers to the residual income which is left after meeting all liabilities and expenses and is distributed to the owners of the organisation.