Ch04(6th)Post - Chapter F4 Reporting Earnings and Financial...

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Reporting Earnings Reporting Earnings and Financial Position and Financial Position Chapter Chapter F4 F4
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4 - 2 1. Identify the primary financial statements issued by businesses. 2. Explain information presented on a company’s income statement. 3. Explain information presented on a company’s balance sheet. 4. Explain information presented on a company’s statement of stockholders’ equity. Objectives Objectives
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4 - 3 5. Identify some of the primary limitations of financial statements. Objectives Objectives
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4 - 4 The Purpose of Financial Statements The Purpose of Financial Statements Most business organizations prepare three financial statements to report general- purpose accounting information: 1 . An income statement 2. A balance sheet 3. A statement of cash flows (Chapter 5) Obj - 1
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4 - 5 Income Statement Income Statement An income statement reports an organization’s revenues and expenses for a fiscal period. Sometimes called an earnings statement…or a profit and loss (P & L) statement. Obj - 1
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4 - 6 Balance Sheet Balance Sheet The balance sheet reports the balances of the asset, liability, and owners’ equity accounts at a particular date. Sometimes referred Sometimes referred to as a statement of financial to as a statement of financial position …or as a statement of position …or as a statement of financial condition financial condition Obj - 1
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4 - 7 Statement of Cash Flows Statement of Cash Flows This statement enables creditors, investors, and other users to assess a company’s ability to meet its cash requirements. Obj - 1
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4 - 8 Statement of Statement of Stockholders’ Equity Stockholders’ Equity This statement reports changes in a corporation’s stockholders’ equity for a fiscal period. Obj - 1
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4 - 9 Favorite Cookie Company Income Statement For the Year Ended December 31, 2007 Sales revenue $686,400 Cost of goods sold (457,600 ) Gross profit 228,800 Selling, general, and administrative expenses (148,300 ) Operating income 80,500 Interest expense (4,800 ) Pretax income 75,700 Income taxes (22,710 ) Net income $ 52,990 Earnings per share Average number of common shares 4,000 $ 13.25 Exhibit 1 Exhibit 1 Obj - 2
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4 - 10 Favorite Cookie Company Income Statement For the Year Ended December 31, 2007 Sales revenue $686,400 Cost of goods sold (457,600 ) Gross profit 228,800 Selling, general, and administrative expenses (148,300 ) Operating income 80,500 Interest expense (4,800 ) Pretax income 75,700 Income taxes (22,710 ) Net income $ 52,990 Earnings per share Average number of common shares 4,000 $ 13.25 Sales revenue is revenue from sales of goods and services. Exhibit 1 Exhibit 1 Obj - 2
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4 - 11 Favorite Cookie Company Income Statement For the Year Ended December 31, 2007 Sales revenue $686,400 Cost of goods sold (457,600 ) Gross profit 228,800 Selling, general, and administrative expenses (148,300 ) Operating income 80,500 Interest expense (4,800 ) Pretax income 75,700 Income taxes (22,710 ) Net Income $ 52,990 Earnings per share
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Ch04(6th)Post - Chapter F4 Reporting Earnings and Financial...

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