ch04_ins NIU S11 stu - CHAPTER 4 INCOME STATEMENT AND...

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Chapter 4-1 Click to edit Master subtitle style C H A P T E R 4 INCOME STATEMENT AND RELATED INFORMATION Intermediate Accounting 13th Edition Kieso, Weygandt, and Warfield
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Chapter 4-2 1. Understand the uses and limitations of an income statement. 2. Prepare a single-step income statement. 3. Prepare a multiple-step income statement. 4. Explain how to report irregular items. 5. Explain intraperiod tax allocation. 6. Identify where to report earnings per share information. 7. Prepare a retained earnings statement. Learning Objectives
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Chapter 4-3 Elements Single-step Multiple-step Condensed income statements Income Statement Format of the Income Statement Reporting Irregular Items Special Reporting Issues Usefulness Limitations Quality of Earnings Discontinued operations Extraordinary items Unusual gains and losses Changes in accounting principles Changes in estimates Corrections of errors Intraperiod tax allocation Earnings per share Retained earnings statement Comprehensive income I ncome Statement and Related I nformation
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Chapter 4-4 Evaluate past performance. I ncome 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
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Chapter 4-5 Companies omit items that cannot be measured reliably. I ncome Statement Limitations LO 1 Understand the uses and limitations of an income statement. Income measurement involves judgment. Income is affected by the accounting methods employed.
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Chapter 4-6 Companies have incentives to manage income to meet or beat Wall Street expectations, so that market price of stock increases and value of stock options increase. I ncome Statement LO 1 Understand the uses and limitations of an 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 4-7 Format of the I ncome Statement LO 1 Understand the uses and limitations of an income statement. ________ – Inflows or other enhancements of assets or settlements of its liabilities that constitute the entity’s ongoing major or central operations. Sales, Fee revenue, Interest revenue, Dividend revenue, Rent revenue Elements of the I ncome Statement Cost of goods sold, Depreciation expense, Interest expense, Rent expense, Salary expense – Outflows or other using-up of assets or incurrences of liabilities that constitute the entity’s ongoing major or central operations.
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Chapter 4-8 Format of the I ncome Statement LO 1 Understand the uses and limitations of an income statement. _____ – Increases in equity (net assets) from peripheral or incidental transactions. - Decreases in equity (net assets) from peripheral or Gains and losses can result from sale of investments or plant assets, settlement of liabilities, write-offs of assets.
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This note was uploaded on 05/25/2011 for the course ACCY 331 taught by Professor Madlinger,l during the Spring '08 term at Northern Illinois University.

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ch04_ins NIU S11 stu - CHAPTER 4 INCOME STATEMENT AND...

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