Miscellaneous documents

Miscellaneous documents - Centre for Business...

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Centre for Business Interdisciplinary Studies Business Information Management Accounting Week 3 Financial Statements: Income Statement Concepts of Income and Expenses. Trend analysis.
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Session outline Concept of profit Components of profit Recognition of Income/Revenue Expense recognition criteria Presentation of Income Statement Trend analysis. 2 © AUT Faculty of Business & Law 2010
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Key Terms for the session Income Revenues Gains Expense Losses Cost of goods sold Gross Profit Operating Expenses Net profit Earnings EBIT Interest Taxation EAT EBITDA 3 © AUT Faculty of Business & Law 2010
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Income Statement What is an alternative name for the Income Statement? What is the purpose of preparing an Income Statement? How can the financial performance of a business be measured? Discussion question 4.6 pg 142 4 © AUT Faculty of Business & Law 2010
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Income Statement Also known as Statement of Financial Performance or Profit and Loss Statement Prepared to measure financial performance Profit is simply Income less Expenses for a particular accounting period Exercise 3A 5 © AUT Faculty of Business & Law 2010
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Profit What is profit? It is an accrual based concept (not a measure of cash surplus) Measured as Income – Expenses No absolute measure of profit- depends on accounting model and policies used 6 © AUT Faculty of Business & Law 2010
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The main components of the Income statement are: Income Cost of goods sold Gross profit (Sales – COGS) Operating expenses
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Miscellaneous documents - Centre for Business...

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