My Chapter 4 Lecture Slides

My Chapter 4 Lecture Slides - Income Statement and Related...

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Elements Single-step Multiple-step Condensed income statements Income Statement Format of the Income Statement Reporting Irregular Items Special Reporting Issues Usefulness Limitations Quality of Earnings Discontinued operations Extraordinary items Unusual gains and losses Changes in accounting principles Changes in estimates Corrections of errors Intraperiod tax allocation Earnings per share Retained earnings statement Comprehensive income Income Statement and Related Information
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Past Performance Future Performance Risk Assessment
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Omitted Items Ex. Brand recognition, customer service Accounting Method Choices Ex. Inventory methods Judgment Issues Ex. materiality
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Companies have incentives to manage income to meet or beat Wall Street expectations, so that market price of stock increases and value of stock options increase. LO 1 Understand the uses and limitations of an income statement. LO 1 Understand the uses and limitations of an income statement. Quality of earnings is reduced if earnings management results in information that is less useful for predicting future earnings and cash flows. Quality of Earnings
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LO 1 Understand the uses and limitations of an income statement. LO 1 Understand the uses and limitations of an income statement. Revenues Inflows or other enhancements of assets or settlements of its liabilities Inflows or other enhancements of assets or settlements of its liabilities that constitute the entity’s ongoing major or central operations that constitute the entity’s ongoing major or central operations . Sales Fee revenue Interest revenue Dividend revenue Rent revenue Examples of Revenue Accounts Elements of the Income Statement
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LO 1 Understand the uses and limitations of an income statement. LO 1 Understand the uses and limitations of an income statement. Expenses Outflows or other using-up of assets or incurrences of liabilities Outflows or other using-up of assets or incurrences of liabilities that constitute the entity’s ongoing major or central operations that constitute the entity’s ongoing major or central operations . Cost of goods sold Depreciation expense Interest expense Rent expense Salary expense Examples of Expense Accounts Elements of the Income Statement
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LO 1 Understand the uses and limitations of an income statement. LO 1 Understand the uses and limitations of an income statement. Gains
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This note was uploaded on 09/24/2009 for the course ACIS 3115 taught by Professor Cmeasterwood during the Fall '08 term at Virginia Tech.

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My Chapter 4 Lecture Slides - Income Statement and Related...

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