Question

Ten interrelated dements that are most directly related to measuring the performance and financial status of an enterprise are provided below.

1) Assets
2) liabilities
3) Equity
4) Investments by owners
5) Distributions to owners
6) Comprehensive income
7) Revenues
8) Expenses
9) Gains
10) Losses
Instructions: Identify the element or elements associated with the 12 items below.
a) Arises from peripheral or incidental transactions.
b) Obligation to transfer resources arising from a past transaction.
c) Increases ownership interest.
d) Declares and pays cash dividends to owners.
e) Increases in net assets in a period from nonowner sources.
f) Items characterized by service potential or future economic benefit.
g) Equals increase in assets less liabilities during the year, after adding distributions to owners and subtracting investments by owners.
h) Arises from income statement activities that constitute the entitys ongoing major or central operations.
i) Residual interest in the assets of the enterprise after deducting its liabilities.
j) Increases assets during a period through sale of product.
k) Decreases assets during the period by purchasing the companys own stock.
l) Includes all changes in equity during the period, except those resulting from investments by owners and distributions

Answer 1

Each of the twelve items provided can be matched to one of ten interrelated elements that represent various aspects of a business's performance and financial status, demonstrating the intricate financial structures of enterprises.

Step-by-step explanation:

When considering the ten interrelated elements that measure the performance and financial status of an enterprise, the items provided can be linked to these elements as follows:

• a) Gains: Arises from peripheral or incidental transactions.
• b) Liabilities: Obligation to transfer resources arising from a past transaction.
• c) Investments by owners: Increases ownership interest.
• d) Distributions to owners: Declares and pays cash dividends to owners.
• e) Revenues: Increases in net assets in a period from nonowner sources.
• f) Assets: Items characterized by service potential or future economic benefit.
• g) Comprehensive income: Equals increase in assets less liabilities during the year, after adding distributions to owners and subtracting investments by owners.
• h) Revenues: Arises from income statement activities that constitute the entity's ongoing major or central operations.
• i) Equity: Residual interest in the assets of the enterprise after deducting its liabilities.
• j) Revenues: Increases assets during a period through sale of product.
• k) Treasury stock transactions (not explicitly listed among the elements but commonly associated): Decreases assets during the period by purchasing the company's own stock.
• l) Comprehensive income: Includes all changes in equity during the period, except those resulting from investments by owners and distributions to owners.

A balance sheet employs a T-account format to represent assets, liabilities, and equity, ensuring assets always equal liabilities plus net worth. These concepts are crucial for understanding the financial health and activity of a business.