Chapter+4 - INTERMEDIATE F I F T E E N T H E D I T I O N...

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Chapter 4 / Exercise EX4-26
Accounting
Reeve/Warren
Expert Verified
4-1Prepared by Coby HarmonUniversity of California, Santa BarbaraIntermediate AccountingIntermediate AccountingPrepared by Coby HarmonUniversity of California, Santa BarbaraWestmont CollegeINTERMEDIATEACCOUNTINGF I F T E E N T H E D I T I O Nkiesoweygandtwarfieldteam for success
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Accounting
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Chapter 4 / Exercise EX4-26
Accounting
Reeve/Warren
Expert Verified
4-2PREVIEW OF CHAPTERIntermediate Accounting15th EditionKieso Weygandt Warfield4
4-31.Understand the uses and limitations of an income statement.2.Describe the content and format of the income statement.3.Prepare an income statement.4.Explain how to report various income items.5.Identify where to report earnings per share information.6.Understand the reporting of accounting changes and errors.7.Prepare a retained earnings statement.8.Explain how to report other comprehensive income.After studying this chapter, you should be able to:Income Statement and Related Information4LEARNING OBJECTIVESLEARNING OBJECTIVES
4-4Evaluate past performance.LO 1 Understand the uses and limitations of an income statement.Help assess the risk or uncertainty of achieving future cash flows.Predicting future performance.UsefulnessIncome StatementIncome Statement
4-5LimitationsLO 1 Understand the uses and limitations of an income statement.Companies omit items that cannot be measured reliably.Income is affected by the accounting methods employed.Income measurement involves judgment.Income StatementIncome Statement
4-6Companies have incentives to manage incometo meet or beat Wall Street expectations, so thatmarket price of stock increases andvalue of stock options increase. LO 1 Understand the uses and limitations of an income statement.Quality of earningsis reduced if earnings management results in information that is less useful for predicting future earnings and cash flows.Quality of EarningsIncome StatementIncome Statement
4-71.Understand the uses and limitations of an income statement.2.Describe the content and format of the income statement.3.Prepare an income statement.4.Explain how to report various income items.5.Identify where to report earnings per share information.6.Understand the reporting of accounting changes and errors.7.Prepare a retained earnings statement.8.Explain how to report other comprehensive income.After studying this chapter, you should be able to:Income Statement and Related Information4LEARNING OBJECTIVESLEARNING OBJECTIVES
4-8Format of the Income StatementFormat of the Income StatementLO 2 Describe the content and format of the income statement.Revenues– Inflows or other enhancements of assets or settlements of its liabilitiesthat constitute the entity’s ongoing major or central operations.SalesFee Interest Examples of Revenue AccountsElements of the Income StatementDividend Rent
4-9Format of the Income StatementFormat of the Income StatementExpenses– Outflows or other using-up of assets or incurrences of liabilities that constitute the entity’s ongoing major or central operations.

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