ACCT 3309 Lecture 2 - Activity Based Costing Income...

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Class 2 Income Statement & Statement of Cash Flows
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Business focus—liquidity, profitability, growth, & financing. Income Statement—focus is profitability Statement names: Income Statement Operating Statement Statement of Revenues & Expenses Statement of Earnings Basic Income Statement format Income Statement
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Focus of statement is profit, net income, earnings. Simple basic formula— revenues – expenses = profit Expenses/Costs (categorized not lumped together) Cost behaviors Fixed costs Variable costs Semivariable—mixed costs Income Statement
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Attaching cost to a product or service. Direct costs—directly traceable to a product or service Primary direct costs—materials & labor Indirect costs—all other costs besides direct. (indirect mfg. costs, marketing, sales, accounting, R & D, HR, etc.) Indirect costs are allocated to the products & services of a company. Burden rate (predetermined overhead rate)
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Unformatted text preview: Activity Based Costing Income Statement Product (Inventoriable) vs. Period costs Gross Proft (Margin) vs. Operating proft Statement Format (±igure 3.3, page 44) EBIT & EBITDA Used to determine management perFormance. Income Statement Statement focus—liquidity (Where did cash come from & where did cash go?) Income Statement is based on accrual acctg. SCF focus is only on cash in and cash out. Net Income and Cash Flow is NOT the same. Direct vs. Indirect method of preparing SCF. (See Figures 4.2 & 4.3, page 52) Statement of Cash Flows (SCF) Three types of cash Fows: 1. Operations 2. Investing 3. ±inancing Yum Brands Statement of Cash ±lows analysis. Class Meeting 3: 1. Case I for next class meeting—Solving the puzzle of the cash Fow statement. Pages 75-82. 2. Review Yum Brands ²nancial statements. Statement of Cash Flows...
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