ch04_-_updated - 4-1Intermediate Accounting14th...

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Unformatted text preview: 4-1Intermediate Accounting14th Edition4Income Statement and Related InformationKieso, Weygandt, and Warfield4-21.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.8.Explain how to report other comprehensive income.Learning ObjectivesLearning ObjectivesLearning ObjectivesLearning Objectives4-3ElementsSingle-stepMultiple-stepCondensed income statementsIncome StatementFormat of the Income StatementReporting Irregular ItemsSpecial Reporting IssuesUsefulnessLimitationsQuality of EarningsDiscontinued operationsExtraordinary itemsUnusual gains and lossesChanges in accounting principlesChanges in estimatesCorrections of errorsIntraperiod tax allocationEarnings per shareRetained earnings statementComprehensive incomeIncome Statement and Related InformationIncome Statement and Related InformationIncome Statement and Related InformationIncome Statement and Related Information4-4Evaluate past performance.Income StatementIncome StatementIncome StatementIncome StatementLO 1 Understand the uses and limitations of an income statement.Help assess the risk or uncertainty of achieving future cash flows.Predicting future performance.Usefulness4-5Income StatementIncome StatementIncome StatementIncome StatementLimitationsLO 1 Understand the uses and limitations of an income statement.Companies omit items that cannot be measured reliably.Income is affected by the accounting methods employed.Income measurement involves judgment.4-6Companies have incentives to manage incometo meet or beat Wall Street expectations, so thatmarket price of stock increases andvalue of stock options increase. Income StatementIncome StatementIncome StatementIncome StatementLO 1 Understand the uses and limitations of an income statement.Quality of earningsis reduced if earnings management results in information that is less useful for predicting future earnings and cash flows.Quality of Earnings4-7Format of the Income StatementFormat of the Income StatementFormat of the Income StatementFormat of the Income StatementLO 1 Understand the uses and limitations of an income statement.Revenues – Inflows or other enhancements of assets or settlements of its liabilities that constitute the entity’s ongoing major or central operations.SalesFee revenueInterest revenueExamples of Revenue AccountsElements of the Income StatementDividend revenueRent revenue4-8Format of the Income StatementFormat of the Income StatementFormat of the Income StatementFormat of the Income StatementLO 1 Understand the uses and limitations of an income statement....
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This note was uploaded on 11/07/2011 for the course ACC 300 taught by Professor Lori during the Fall '10 term at Michigan State University.

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ch04_-_updated - 4-1Intermediate Accounting14th...

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