Equity-the net worth (or net assets) of the organization.Liabilities-amounts the organization owes to others (also called creditors).Assets-items the organization owns, controls, or has a claim to.Losses-losses are similar to expenses but related to вЂњincidental or peripheralвЂќ activities of the organization.Gains-gains are similar to revenue but relate to вЂњincidental or peripheralвЂќ activities of the organization.Expenses-costs of providing the goods or services for which the organization earns revenue.Revenue-value of goods and services the organization sold or provided.There are ten elements of the financial statements, and we have already discussed most of them. To help accountants prepare and users better understand financial statements, the profession has outlined what is referred to as elements of the financial statements, which are those categories or accounts that accountants use to record transactions and prepare financial statements. 7, 2013, while underway in the Solomon Sea 130807-N-NN332-044вЂќ by MC3 Jarred Harral/Wikimedia Commons, Public Domain credit (b): modification of вЂњEaster Cake with Colorful ToppingвЂќ by Kaboompics. Navy Culinary Specialist Seaman Robert Fritschie mixes cake batter aboard the amphibious command ship USS Blue Ridge (LCC 19) Aug. In a similar manner, the study of accounting requires an understanding of how the accounting elements relate to the final product-the financial statements. If used correctly, the final product will be beautiful and, more importantly, delicious, like the cake shown in (b). Figure 2.5 Baking requires an understanding of the different ingredients, how the ingredients are used, and how the ingredients will impact the final product (a).

Balance sheet problems and solutions