COMM2010chapter4

COMM2010chapter4 - Note- A-L= E (Book value or net assets)...

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Note- A-L= E (Book value or net assets) Income Statement- Reflects change in net assets by the difference between revenue and expenses. Revenue reflects change in net assets that a firm receives from goods and services and expenses reflects change in net assets that a firm spends. There are certain accounts which are not included in the income statement but nonetheless affect net assets from the beginning of the period to the end, such as change in issuing shares [positive], change in buying treasury stock [negative], change in dividends [negative], and change in Accumulated Other Comprehensive Income (In IFRS, increases in fair value of assets gets debited to PPE and credited to special equity account AOCI; Revaluation surplus) [positive value]. Comprehensive income- Changes in net assets that are not transactions with owners (not dividends, treasury, shares) and do not appear on the income statement. Comprehensive income= Net income + Other comprehensive income Accumulated other comprehensive income (ending)= AOCI (beginning) + Other comprehensive income (yearly) [similar to net income affect on retained earnings] Note- USGAAP records AOIC for certain currency translation adjustments, changes in pension plan assumptions, and changes in valuation for some investments Neither USGAAP or IFRS tells how to create income statement so you will see differences in presentation (even between the same category). The only cases where they are the same are revenues and net income. Revenue (Sales of goods or Turnover; Could include franchise sales in addition to main business) recognition is the biggest source of accounting fraud. It can only be recorded at the time it has completed part or all of the promises/obligations to customers (acquired or
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This note was uploaded on 02/27/2011 for the course COMM 2010 taught by Professor Maryeriksson during the Spring '11 term at UVA.

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COMM2010chapter4 - Note- A-L= E (Book value or net assets)...

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