Ch04 ppt Income Statement, Retained Earings_ EPS - 4 Income...

This preview shows page 1 - 9 out of 60 pages.

We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
Accounting
The document you are viewing contains questions related to this textbook.
Chapter 4 / Exercise EX4-26
Accounting
Reeve/Warren
Expert Verified
4-11.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
We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
Accounting
The document you are viewing contains questions related to this textbook.
Chapter 4 / Exercise EX4-26
Accounting
Reeve/Warren
Expert Verified
4-2Evaluate 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
4-3LimitationsLO 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
4-4Companies 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
4-5Format 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 liabilities that constitute the entity’s ongoing major or central operations.SalesFee Interest Examples of Revenue AccountsElements of the Income StatementDividend Rent
4-6Format 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.Examples of Expense AccountsElements of the Income StatementCost of goods soldDepreciation InterestRent Salaries and wagesTaxesLO 2 Describe the content and format of the income statement.
4-7Format of the Income StatementFormat of the Income StatementGains and lossescan result fromsale of investments or plant assets, settlement of liabilities, write-offs of assets.Elements of the Income StatementGains– Increases in equity (net assets) from peripheral or incidental transactions.Losses- Decreases in equity (net assets) from peripheral or incidental transactions.LO 2 Describe the content and format of the income statement.
4-8Format referred to as multiple-step income statement.

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture