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3311Ch04 - CHAPTER4 Sommers ACCT3311 InGeneral

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8/31/2010 1 CHAPTER 4 THE INCOME STATEMENT AND STATEMENT OF CASH FLOWS Sommers – ACCT 3311 In General The purpose of income statement is to i th fit ti ti iti th t summarize the profit generating activities that occurred during a particular period. The purpose of statement of cash flow is to provide information about the cash receipts and cash disbursements of a firm that occurred during a period.
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8/31/2010 2 Income from Continuing Operations Expenses Outflows of resources incurred in generating Revenues Inflows of resources resulting from providing Gains and Losses Increases or decreases in equity from Income Tax Expense Because of its importance and size, revenues. goods or services to customers. peripheral or incidental transactions of an entity. income tax expense is a separate item. Operating Income Nonoperating Income Operating Versus Nonoperating Income Includes revenues and expenses directly related to the principal Includes gains and losses and revenues and expenses related to peripheral or revenue generating activities of the company incidental activities of the company
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8/31/2010 3 Income Statement (Single Step) MAXWELL GEAR CORPORATION Income Statement For the Year Ended December 31, 2009 { Proper Heading { Revenues and gains: Sales 573,522 $ Interest and dividends 26,400 Gain on sale of opearting assets 5,500 Total revenues and gains 605,422 Expenses and losses: Cost of goods sold 302,371 $ { Revenues & Gains Expenses & Losses Selling 47,341 General and administrative 24,888 Research and development 16,300 Interest 6,200 Loss on sale of investment 8,322 Income taxes 80,000 Total expenses & losses 485,422 Net income 120,000 $ Income Statement (Multiple Step) { MAXWELL GEAR CORPORATION Income Statement For the Year Ended December 31, 2009 Sales revenue 573 522 $ { Proper Heading { Non Gross Profit Operating Expenses { 573,522 $ Cost of goods sold 302,371 Gross profit 271,151 Operating expenses: Selling 47,341 $ General and administrative 24,888 Research and development 16,300 88,529 Operating income 182,622 Other income (expense): operating Items Interest and dividend revenue 26,400 $ Gain on sale of operating assets 5,500 Interest expense (6,200) Loss on sale of investments (8,322) 17,378 Income before income taxes 200,000 Income tax expense 80,000 Net income 120,000 $
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8/31/2010 4 Representative (Multiple Step) Income Statement Items Revenue Cost of goods sold Gross Profit Operating expenses Operating income Other income (expenses) Income from continuing operations before tax Income tax Income from continuing operation Gain (loss) from discontinued operations (net of tax) Income before extraordinary items Gain (loss) from extraordinary items (net of tax) Net income Other comprehensive income items Comprehensive income Earnings per share – basic Earnings per share diluted U. S. GAAP vs. IFRS There are more similarities than differences between income statements prepared according to U.S. GAAP and those prepared applying IFRS.
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