ELEMENTS OF FINANCIAL STATEMENTS

• Assets are probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events.

• Liabilities are 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 events.

• Equity or net assets, called shareholders’ equity or stockholders’ equity for a corporation, is the residual interest in the assets of an entity that remains after deducting liabilities.

• Investments by owners are increases in equity resulting from transfers of resources (usually cash), to a company in exchange for ownership interest.

• Distributions to owners are decreases in equity resulting from transfers to owners.

• Revenues are inflows or other enhancements of assets or settlements of liabilities from delivering or producing goods, rendering services, or other activities that constitute the entity’s ongoing major or central operations.

• Gains are increases in equity from peripheral, or incidental, transactions of an entity.

• Expenses are outflows or other using up of assets or incurrences of liabilities during a period from delivering or producing goods, rendering services, or other activities that constitute the entity’s ongoing major or central operations.

• Losses represent decreases in equity arising from peripheral, or incidental, transactions of the entity.

• Comprehensive income is the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.