Ch_4___Intermediate_accounting - Ch 4 Intermediate...

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Unformatted text preview: Ch 4 Intermediate accounting (Kieso) Income Statement is the report that measures the success of company operations for a given period of time. Usefulness of the Income statement : 1. Evaluate the past performance of the company 2. It provide a basis for predicting future performance 3. It help access the risk or uncertainly of achieving future cash flows Limitations of the Income statement : 1. Companies omit items from the income statement that they can’t measure reliably Ex: a company may not record unrealized gains & losses on certain investment securities in income when there’s uncertainty that it’ll ever realize the changes in value. 2. Income numbers are affected by the accounting methods employed 3. Income measurement involves judgment Element of I.S : ( P.S. I’ll use I.S for the following, which stands for Income Statement ^^) Revenue : sales, fees, interest, dividends, and rents. Expenses : COGS, depreciation, interest, rent, salaries, wages, and taxes. Gains & Losses: sale of investments or plant assets, settlement of liabilities, write-offs of assets due to impairments of casualty. due to impairments of casualty....
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This note was uploaded on 06/18/2008 for the course ACCTG 321 taught by Professor Will during the Spring '08 term at San Diego State.

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Ch_4___Intermediate_accounting - Ch 4 Intermediate...

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