The 10 elements of financial statements, according to FASB

By Ken Tysiac

FASB issued a proposed new chapter to its Conceptual Framework on Thursday that defines 10 elements of financial statements and seeks feedback from stakeholders.

The proposed chapter is titled Concepts Statement No. 8, Conceptual Framework for Financial Reporting: Chapter 4, Elements of Financial Statements. In the proposal, the 10 elements of financial statements to be applied in developing standards for public and private companies and not-for-profits are:

  • Assets;
  • Liabilities;
  • Equity (net assets);
  • Revenues;
  • Expenses;
  • Gains;
  • Losses;
  • Investments by owners;
  • Distributions to owners; and
  • Comprehensive income.

The proposed new chapter would replace Concepts Statement No. 6, Elements of Financial Statements, and is intended to clarify and improve upon the previous elements. The new chapter would:

  • Clearly identify the right or obligation that gives rise to an asset or a liability.
  • Eliminate terminology that makes the definitions of assets and liabilities difficult to understand and apply.
  • Clarify the distinction between liabilities and equity between revenues and gains and expenses and losses.
  • Modify the distinctions in equity for not-for-profit entities.

“The proposed new chapter of the FASB’s Conceptual Framework will provide a useful reference in the board’s future standard-setting process,” FASB Chairman Richard Jones said in a news release. “An updated Conceptual Framework can help us set standards that improve the understandability of information companies and organizations provide to existing and potential investors, lenders, donors, and other resource providers.”

Comments can be submitted through Nov. 13 at FASB’s website.

Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.

SPONSORED REPORT

Scorecard preparation templates and tips

With Workiva, we've created a PowerPoint deck that helps you create your own scorecards -- quick reference reports used across organizations to update stakeholders on the performance of defined deliverables.

100th ANNIVERSARY

Black CPA Centennial, 1921–2021

With 2021 marking the 100th anniversary of the first Black licensed CPA in the United States, a yearlong campaign kicked off to recognize the nation’s Black CPAs and encourage greater progress in diversity, inclusion, and equity in the CPA profession.