F/S Elements

Elements of Financial Statements:

A full set of F/S includes:

1. Stmt of Position (B/S)
2. Stmt of Earnings Fin & Comprehensive Income (I/S)
3. Stmt of Cash Flows
4. Stmt of Changes in Owners' Equity (Stmt of Investment by & Distributions to Owners)

10 key elements -

3 Basic elements are:

1. Assets
2. Liab
3. Equity or Net Assets:

Equity: 3 elements -

4. Contributions/ investments by owners

5. Distributions to owners (dividends)

6. Comprehensive Income: DENT -

• Derivative Cash Flow Hedges
• Excess adjustment of Pension PBO & FV of plan assets @ yr-end
• Net unrealized gains/losses on "available-for-sale" securities
• Translation adj for foreign currency

Comprehensive Income: capital maintenance concept-

• Physical Capital Maintenance Concept - recognize an event when an asset is sold
• Financial Capital Maintenance Concept  - when change in value of an asset (gain or loss) -GAAP

Comprehensive income:

7. Revenues,

8. Expenses,

9.  Gains,

10. Losses

Accounting Rules & Concepts:

1. Consistency
2. Conservatism
3. Cost/Benefit
4. Matching
5. Allocation
6. Full Disclosure
7. Recognition
8. Realization

Recognition & Measurement:

Recognize a F/S element & how to measure it - meet definition, monetary terms, relevant & faithful representation

Monetary Terms:

• Historical Cost
• Replacement Cost
• FMV - Fair Market Value
• NRV - Net Realizable Value
• PV - Present Value