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Instructor%20Notes%20-%20Chapter%209 - Management 200T The...

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Management 200T The Income Statement and Statement of Cash Flows Chapter 9 Income Statement Revenues “Inflows or other enhancements of assets of an entity or settlements of its liabilities from delivering or producing goods, rendering services, or other activities that constitute the entity’s ongoing major or central operations. When you sell a product or service and receive cash, create an account receivable or satisfy an obligation To be to be recognized, revenues must be realized or realizable AND earned Expectation that the product or service provided will result in a cash receipt Earned means that entity has completed or substantially completed the activities it must perform to be entitled to the revenue benefits Sometimes one is more significant than the other – magazines business or construction Gross Sales – returns and allowances – discounts = Net Sales Expenses “outflows or other using up of assets or incurrences of
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