Spr10-CH 4_1 - IncomeStatementandStatement ofCashFlows...

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Income Statement and Statement  of Cash Flows Spiceland – Chapter 4
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Income Statement Measures performance over a fixed period of  time (accounting reporting period) as  opposed to at a certain point in time. Allows users to predict future cash flows  because the I/S shows past and current  performance.
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Expenses Outflows of  resources  incurred in  generating  revenues. Revenues Inflows of  resources  resulting  from  providing  goods or  services to  customers. Gains and  Losses Increases or  decreases in  equity from  peripheral or  incidental  transactions  of an entity. Income from Continuing Operations Income Tax  Expense Because of  its  importance  and size,  income tax  expense is a  separate  item. 
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Operating  Income Nonoperating  Income Operating Versus Nonoperating Income Operating Versus Nonoperating Income Includes revenues  and expenses  directly related to  the  principal  revenue- generating  activities  of the  company Includes gains  and losses and  revenues and  expenses  related  to peripheral or  incidental  activities  of the  company
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Income Statement (Multiple-Step) { Non-  operating  Items { Gross  Profit Operating  Expenses { MAXWELL GEAR CORPORATION Income Statement For the Year Ended December 31, 2009 Sales revenue 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): 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 $ { Proper  Heading
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Irregular Items Discontinued operations Extraordinary items Unusual gains and losses Changes in accounting principle Changes in estimates Correction of errors
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Separately Reported Items Reported separately, net of taxes: Discontinued  operations $ xxx xx xxx Net Income $ xxx Extraordinary items (net of $xx in taxes) Income from continuing operations before income taxes and extraordinary items Income tax expense Income from continuing operations before extraordinary items Discontinued operations (net of $xx in taxes) Extraordinary  items
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Discontinued Operations Discontinued operations occur when: 1. The results and operations and cash flows of a component of a  company have been (or will be) eliminated from the ongoing  operations and 2. There is no significant continuing involvement in that component after  the disposal date.
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Discontinued Operations If segment has been sold/disposed: 1.
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This note was uploaded on 11/03/2010 for the course ACCTG 321 taught by Professor Will during the Spring '08 term at San Diego State.

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Spr10-CH 4_1 - IncomeStatementandStatement ofCashFlows...

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