Accounting

Elements of Financial Statements

(Hello! It's been a while!! We already know the Financial Statements, now let's study the elements. Are you ready? Aye I can't hear youuuu!!)

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Elements of Financial Statements

1. Asset - resource controlled by the enterprise; own by the business as a result of past events.

Current Asset
- intended for sale or consumption in the entity's normal operating cycle.
- held primarily for the purpose of being traded.
- withing twelve months
- it is a cash or cash equivalent; anything that can be converted to cash within one year

Example:
Cash on hand
Petty cash fund
Cash in bank
Accounts Receivable
Notes Receivable
Unused Supplies
Prepayments
Inventory

Noncurrent Asset
- long term asset

Ex:
Land
Buildings
Accumulated-Depreciation (Building)
Equipmentsl
Accumulated-Depreciation (Equipment)

2. Liability - present obligation of the enterprise; owe by the business

Current Liability
- expected to be settled in the entity's normal operaction cycling
- due to be settled withing twelve months

Ex:
Accounts Payable
Notes Payable
Unearned Income
Expense Payable

Noncurrent Liability
- long term liability

Ex:
Mortgage Payable
Machinery Loans
Deferred Compensation

3. Equity - is the residual interest; ownership interest (A-L=E)

Ex:
Owner's Capital
Owner's Drawings

4. Income/Revenue - increase in economic benefits

Ex:
Sales or Service Income

5. Expense/Cost - decrease in economic benefits

Ex:
Cost of Sales/Cost of Services
Salaries Expense
Utilities Expense
Rent Expense
Supplies Expense
Transportation Expense
Depreciation Expense
Representation Expense
Interest Expense

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That's all!! Credits: Solita Frias and the Investopedia for being my reference.

I got busy because I'm working on my enrollment papers. Professors in college really have a high expectation to K-12 graduates. Fighting! For our dreams!! See you on the next lesson!