ch04 - Chapter 4-1 C H A P T E R C H A P T E R 4 4 INCOME...

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Unformatted text preview: Chapter 4-1 C H A P T E R C H A P T E R 4 4 INCOME STATEMENT AND RELATED INCOME STATEMENT AND RELATED INFORMATION INFORMATION Intermediate Accounting I Prof. Volkan Muslu Chapter 4-2 Evaluate past performance. Income Statement Income Statement LO 1 Understand the uses and limitations of an income statement. LO 1 Understand the uses and limitations of an income statement. Help assess the risk or uncertainty of achieving future cash flows. Predicting future performance. Usefulness Limitations Companies omit items that cannot be measured reliably. Income is affected by the accounting methods employed. Income measurement involves judgment. Chapter 4-3 Companies have incentives to manage income to meet or beat Wall Street expectations Income Statement Income Statement LO 1 Understand the uses and limitations of an income statement. LO 1 Understand the uses and limitations of an income statement. Earnings management is managers planned timing of income statement items to achieve (mostly personal) objectives. Quality of Earnings is the degree to which earnings information is useful to outsiders. Earnings management and Quality of earnings are negatively related. Quality of Earnings Chapter 4-4 Format of the Income Statement Format of the Income Statement LO 1 Understand the uses and limitations of an income statement. LO 1 Understand the uses and limitations of an income statement. Revenues Inflows or other enhancements of assets or settlements of its Inflows or other enhancements of assets or settlements of its liabilities that constitute the entitys ongoing major or central operations. liabilities that constitute the entitys ongoing major or central operations. Sales Sales Fee revenue Fee revenue Interest revenue Interest revenue Dividend revenue Dividend revenue Rent revenue Rent revenue Examples of Revenue Accounts Elements of the Income Statement Chapter 4-5 Format of the Income Statement Format of the Income Statement LO 1 Understand the uses and limitations of an income statement. LO 1 Understand the uses and limitations of an income statement. Expenses Outflows or other using-up of assets or incurrences of liabilities Outflows or other using-up of assets or incurrences of liabilities that constitute the entitys ongoing major or central operations. that constitute the entitys ongoing major or central operations. Cost of goods sold Cost of goods sold Depreciation expense Depreciation expense Interest expense Interest expense Rent expense Rent expense Salary expense Salary expense Examples of Expense Accounts Elements of the Income Statement Chapter 4-6 Format of the Income Statement Format of the Income Statement LO 1 Understand the uses and limitations of an income statement....
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ch04 - Chapter 4-1 C H A P T E R C H A P T E R 4 4 INCOME...

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