Answer
Elements comprise various predominant income-related items that are instrumental in completing an income statement. Examples of the elements include revenues, which depict inflows into an entity; expenses that comprise outflows from an entity; gains that result in a growth in an entity's net assets; and losses that culminate in the decrease of an entity’s net assets. Items are narrower than elements. Items fall under elements. For example, assets (which are elements) comprise items such as land. Items must be included in income statements because they offer details that are crucial for the users interested in forecasting an entity’s probable net incomes and likely cash flows in forthcoming periods.
Work Step by Step
Elements comprise various predominant income-related items that are instrumental in completing an income statement. Examples of the elements include revenues, which depict inflows into an entity; expenses that comprise outflows from an entity; gains that result in a growth in an entity's net assets; and losses that culminate in the decrease of an entity’s net assets. Items are narrower than elements. Items fall under elements. For example, assets (which are elements) comprise items such as land. Items must be included in income statements because they offer details that are crucial for the users interested in forecasting an entity’s probable net incomes and likely cash flows in forthcoming periods.
