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Kieso_Inter_13e_Ch04

Kieso_Inter_13e_Ch04 - CHAPTER 4 INCOME STATEMENT AND...

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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 13th Edition Kieso, Weygandt, and Warfield
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Chapter 4-2 Evaluatepast performance. Income Statement Income Statement Help assess therisk or uncertainty of achieving futurecash flows. Predicting futureperformance. Usefulness
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Chapter 4-3 Companies omit items that cannot bemeasured reliably. Income Statement Income Statement Limitations Incomemeasurement involves judgment. Incomeis affected by theaccounting methods employed.
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Chapter 4-4 Companies have incentives to manage income to meet or beat Wall Street expectations, so that market priceof stock increases and valueof stock options increase. Income Statement Income Statement Quality of earnings is reduced if earnings management results in information that is less useful for predicting future earnings and cash flows. Quality of Earnings
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Chapter 4-5 Format of the Income Statement Format of the 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 constitutetheentity’s ongoing major or central operations. liabilities that constitutetheentity’s ongoing major or central operations. Sales Sales Feerevenue Feerevenue Interest revenue Interest revenue Dividend revenue Dividend revenue Rent revenue Rent revenue Examples of Revenue Accounts Elements of the Income Statement
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Chapter 4-6 Format of the Income Statement Format of the 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 constitutetheentity’s ongoing major or central operations. that constitutetheentity’s 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
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Chapter 4-7 Format of the Income Statement Format of the Income Statement Gains – Increases in equity (net assets) fromperipheral or incidental – Increases in equity (net assets) fromperipheral or incidental transactions. transactions. Losses - Decreases in equity (net assets) fromperipheral or incidental - Decreases in equity (net assets) fromperipheral or incidental transactions. transactions. Gains and losses can result from Gains and losses can result from saleof investments or plant assets, saleof investments or plant assets, settlement of liabilities, settlement of liabilities, write-offs of assets. write-offs of assets.
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