Lecture Notes Week 3 - WEEK 3 1 THE INCOME STATEMENT AND TRANSACTION ANALYSIS Introduction Last week we learnt that all transactions affect the

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WEEK 3: THE INCOME STATEMENT AND TRANSACTION ANALYSIS 1. Introduction Last week we learnt that all transactions affect the Balance Sheet. Transactions that result in the earning of a profit (or a loss) are also reported in the Income Statement. If a company earns a profit its net wealth is increased by the size of that profit, in the same way the profit reported in the Income Statement is the amount by which a company’s financial position has changed from one period to the next. Learning objectives At the end of this topic you should be able to: Distinguish between accrual and cash accounting Identify when a company earns revenue or incurs an expense Identify transactions Analyse the effect of transactions on the accounting equation Understand the terms, format and function of the Statement of Financial Performance AASB Framework for the Preparation and Presentation of Financial Statements (downloadable from http://www.aasb.com.au )
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2. Tutorial Questions – Week 4 Preparation Questions: ± T&G 2.21 ± T&G 2.16 ± T&G 2.23 ± T&G 3.1 Tutorial Questions: ± AQ1 ± T&G 2.17 ± T&G 2.25 ± T&G 3.30
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Accounting and Financial Management 1A Dr. Amna Khalifa Quad 3104 Week 3, Session 1, 2009 The Statement of Financial Performance Today’s lecture objectives: ± Appreciate the form and content of the income statement ± Describe the relationship between the balance sheet and the income statement ± Understand the implications of the decision to record expenditure as an asset or as an expense ± Understand the differences between cash profit and accrual profit Today’s lecture objectives: ± Expand the accounting equation to account for owners’ equity elements ± To be able to analyse the impact of transactions on the expanded accounting equation ± Understand debits and credits in the context of transaction analysis
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Relating performance and wealth From last lecture… We discussed how we as accountants measure shareholder wealth (i.e. Net Assets) In this lecture we will begin to explore the measurement of changes in shareholder wealth (or changes in Net Assets). ± A company exists for the benefit of it’s shareholders ± Society? Community? Economy ? Environment?
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This note was uploaded on 01/22/2011 for the course ACCT 1501 taught by Professor Helen during the Three '09 term at University of New South Wales.

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Lecture Notes Week 3 - WEEK 3 1 THE INCOME STATEMENT AND TRANSACTION ANALYSIS Introduction Last week we learnt that all transactions affect the

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