The Five Elements of a Financial Statement (2024)

Hi, I'm Dominique Broadway, financial planner and personal finance coach. I'm going to talk about the five elements of a financial statement. Financial statements are used to provide financial information and determine the profitability of a company. To best understand financial statements, it's important to understand the five elements of financial statements. Which are, assets, liabilities, equity, revenues and expenses. Assets are economic resources that are available to the company. This consists of current assets such as cash, investments, recoverable and inventory. And fixed assets such as land, building, equipment, tools, etc. Assets also contain the tangible and intangible assets that the company owns. Liabilities are the resources that the company owes to individuals or companies. Long term liabilities such as mortgages are expected to be paid over an extended amount of time. Short term liabilities such as employee salaries are expected to be paid in the near future. Equity is the money within a company that was either contributed by the owners or is owed to the owners. The contributed funds are called contributed Capital, and the money owed to the owners, is Retained Earnings. Revenues reflect all of the company's income for a specified period of time. For example, the third quarter financial statement would only show revenue for the specified quarter. Expenses are all of the costs that a company has to pay out. Such as revenue, expenses are only included for a specified time frame. I'm Dominique Broadway, and I've just discussed the five elements of a financial statement.