Elements of Financial Statements

Asset

1. Assets are the economic resources used to run the business without intention to resell, in which, the future economic benefits are expected to flow into the business.
2. Assets are presented in the statement of financial position.

Non-current assets:

Assets that are used to run the business without intention to resell is a noncurrent asset. These assets have useful life for more than one year.

Example; land, building, office equipment.

2 types of Non-current assets:

Tangible assets include both non-current assets and current assets. They refer to assets which have a physical existence. 

Example: ovens, mixers, refrigerators, inventory 

Intangible assets refer to assets that are not physical in nature. These assets have value to the organization as they could generate a competitive advantage to the business. 

Example: trademark, copyright, patent, goodwill

Current assets:

Assets that are used with the intention to resell and the assets that are expected to realize or used within 12 months after the reporting period such as closing inventory and prepaid expenses.

Liability

Liabilities are the obligations of an entity to other entities/ External parties’ claim to the business assets/ Amounts owed by a business to outside parties.

Example; creditors, long-term  loan, etc

Equity

Owner supplied fund to the business for acquisition of assets for the business.

Revenue

Revenue Revenues are income generated by the business from the course of ordinary activities, which are the trading or normal operating activities. 

Example; rental income, interest income,etc

Expense

1. Expenses are costs incurred when it decreases the economic benefits in the form of outflow or depletion in value.
2. Expenses are reported in the statement of profit or loss.

Expenses: Purchase (comp hardware and software) and Utilities expenses.