[회계이원창]FinAcc lecture note (2) ch

[회계이원창]FinAcc lecture note (2) ch

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Financial Accounting Lecture Note (2), Spring 2009 Professor Won-Wook Choi, Yonsei School of Business Chapter 3 Income Statement 1. Definition of income (loss) Income (loss) is the increase (decrease) in net assets resulting from periodic operation. Net assets = assets – liabilities = equities. Net income (I/S) = change in retained earnings (B/S) + dividends declared 2. Revenue and expense - recognized by accrual basis (not by cash basis). Revenue is recognized when it is earned and realized. Earned: earnings process complete. exchange taken place. Realized: reasonably certain amount. Expense is matched with revenue periodically. Periodic allocation of cost as expenses is a very important issue. Used cost is an expense while unused cost remains as an asset. Four typical accounts to be observed on 12/31/2001 B/S due to accrual basis: (1) deferred expense - cash paid in 2001, right to receive benefit in 2002. (2) deferred revenue-cash received in 2001, obligation to serve clients in 2002. (3) accrued expense – benefit received but no cash paid in 2001. (4) accrued revenue – served clients but no cash received in 2001. 3. gains and losses – from incidental activities (example: gain on sale of equipment) revenues and expenses – from main courses of business. 4. Examples of I/S Accounts Sales - Cost of goods sold = Gross profit Gross profit - Selling and administrative expenses = Operating income Operating income ± Other revenues or expenses = Income from continuing operations Income from continuing operations ± extraordinary gain or loss = Income before tax
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This note was uploaded on 04/18/2010 for the course BUSINESS 231 taught by Professor Steven during the Spring '10 term at 카이스트, 한국과학기술원.

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[회계이원창]FinAcc lecture note (2) ch

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