Chapter 4 Outline

Chapter 4 Outline - or product line of a company 1. Gain or...

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Chapter 4 Income Statement Net Sales Revenue earned from selling goods or providing services Cost of Goods Sold The cost of the product only a. Merchandising entity b. Manufacturing entity Operating Expenses Usually selling, general and administrative expenses Operating Income or Earnings before interest and taxes (EBIT) Other Income and Expenses 1. Interest income 2. Dividend income 3. Gains 4. Interest expense 5. Losses Unusual or infrequent items Some items are unusual and do not occur too often or are material enough to require separate disclosure. 1. Depreciation and amortization 2. Restructuring charges 3. Research and development Equity earnings in non-consolidated subsidiaries Equity method May distort ratio analysis Income taxes on operations
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Other non recurring items of income expense gains or losses Discontinued Operations Results from the sale or discontinuance of a business segment
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Unformatted text preview: or product line of a company 1. Gain or loss on disposal 2. Profit or loss from discontinued operations 3. Shown net of taxes Extraordinary Items 1. Infrequent 2. Material 3. Unusual Cumulative Effect of Change in Accounting Principle When changing from one generally accepted accounting method to another. Since prior years statements do not reflect the change analysis becomes difficult and prior statements may be disregarded. Retained Earnings Reconciliation of changes during the year Appropriations Dividends 1. Cash 2. Stock Stock Splits Comprehensive Income Foreign currency translation adjustments Unrealized gains and losses on available for sale securities Minimum pension liability adjustments Unrealized gains and losses from derivative instruments...
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Chapter 4 Outline - or product line of a company 1. Gain or...

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