The elements of financial statements

The elements of financial statements are the classes of items contained in the financial statements. Financial statements portray the financial effects of transactions and other events by grouping them into broad classes according to their economic characteristics. These broad classes are termed the elements of financial statements.The elements of financial statements


There are two main groups of elements:

  • The first is associated with the measurement of an entity’s financial position: assets, liabilities and equity.
  • The second is related to the measurement of performance: income and expenses.

Within these main categories there are sub-classifications. For example, assets and liabilities may be classified by their nature or function in the business of the entity in order to display information in the manner most useful … Read more