12_Income Statement and Cash Flow Effects

12_Income Statement and Cash Flow Effects - Where have we...

Info iconThis preview shows pages 1–9. Sign up to view the full content.

View Full Document Right Arrow Icon
Where have we been… Introduce the Balance Sheet, Income Statement and Cash Flow Statement A=L+E NI=Revenue - Expenses + Gains - Losses ∆CA =∆L+∆E - ∆NCA Accrual Accounting framework Historic cost basis Revenue recognition Matching of Expenses Tools for analysis Lecture 9
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Where are we going… Add to depth of understanding of GAAP Work through select balance sheet accounts and explore related Income statement/Cash Flow effects Bonds, Leases, Taxes & Equity (Statement of Shareholder’s Equity) [Financing or Liabilities and Equity] Lecture 9
Background image of page 2
ARCO Ltd. Income Statement For the years ending December 31 in thousands 2004 2003 Revenues 1,281,618 1,256,488 Cost of Goods Sold 776,510 753,893 Gross Margin 505,108 502,595 315,278 314,122 Pre-tax Income 189,830 188,473 Taxes 75,932 75,389 Net Income 113,898 113,084
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Receivables GAAP requires use of estimates (e.g., uncollectible receivables) incentives influence management’s selection of an option? Lecture 9
Background image of page 4
Earnings Quality Management’s reporting may not be a neutral Analysis attempts to quantify and adjust for such bias These often referred to as “RED FLAGS”. The hope is that you become a sophisticated user of financial statements and avoid being misled! Lecture 9
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Lecture 9 Objectives 1. To understand the mechanics of Accounts Receivable and related accounts. 2. To understand the financial statement disclosure of receivables.
Background image of page 6
Lecture 9 Agenda 1. Accounts Receivable 2. Methods for addressing uncollectible accounts 3. Summary of Effects on Financial Statements 4. Take-Aways
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Revenue Recognition Revenue should be recognized when the
Background image of page 8
Image of page 9
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/17/2011 for the course MGMT 600 taught by Professor Johnston during the Spring '11 term at Purdue.

Page1 / 29

12_Income Statement and Cash Flow Effects - Where have we...

This preview shows document pages 1 - 9. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online