INTRODUCTION

MEANING OF INTERNATIONAL FINANCIAL STATEMENT

ELEMENTS OF FINANCIAL STATEMENT

The International Accounting Standards Board (IASB) Framework discusses the five elements of
financial statements as follows:

Assets – a recourse controlled by an entity as a result of past events from which future economic
benefits are expected to flow to the entity.

Liabilities – a present obligation of an entity arising from past events the settlement of which will
result in an outflow of resources that embody economic benefits.

Equity – the residual interest in an entity after the value of all its liabilities has been deducted from
the value of all its assets..

Income – revenue arising in the course of the ordinary activities of an entity plus gains on the
disposal of non – current assets.

Expenses – payments arising in the normal course of activities, such as the cost of sales and other
operating cost, including depreciation of non - current assets plus losses arising from disposal of non
– current assets or damage due to fire or flooding.