Chapter 4

Chapter 4 - 1. 1. Understand the uses and limitations of an...

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Unformatted text preview: 1. 1. Understand the uses and limitations of an income statement. Understand the uses and limitations of an income statement. 2. 2. Prepare a single-step income statement. Prepare a single-step income statement. 3. 3. Prepare a multiple-step income statement. Prepare a multiple-step income statement. 4. 4. Explain how to report irregular items. Explain how to report irregular items. 5. 5. Explain intraperiod tax allocation. Explain intraperiod tax allocation. 6. 6. Identify where to report earnings per share information. Identify where to report earnings per share information. 7. 7. Prepare a retained earnings statement. Prepare a retained earnings statement. 8. 8. Explain how to report other comprehensive income. Explain how to report other comprehensive income. Chapter 4 - Chapter 4 - INCOME STATEMENT AND INCOME STATEMENT AND RELATED INFORMATION RELATED INFORMATION Chapter 4 - Chapter 4 - INCOME STATEMENT AND INCOME STATEMENT AND RELATED INFORMATION RELATED INFORMATION Elements Elements Single-step Single-step Multiple-step Multiple-step Condensed income Condensed income statements statements Income Income Statement Statement Format of the Format of the Income Income Statement Statement Reporting Reporting Irregular Items Irregular Items Special Special Reporting Issues Reporting Issues Usefulness Usefulness Limitations Limitations Quality of Quality of Earnings Earnings Discontinued Discontinued operations operations Extraordinary items Extraordinary items Unusual gains and Unusual gains and losses losses Changes in Changes in accounting accounting principles principles Changes in Changes in estimates estimates Corrections of Corrections of errors errors Intraperiod tax Intraperiod tax allocation allocation Earnings per share Earnings per share Retained earnings Retained earnings statement statement Comprehensive Comprehensive income income Income Statement and Related Information Income Statement and Related Information Income Statement and Related Information Income Statement and Related Information Evaluate past performance. Income Statement Income Statement Income Statement Income Statement Help assess the risk or uncertainty of achieving future cash flows. Predicting future performance. Usefulness Companies omit items that cannot be measured reliably. Income Statement Income Statement Income Statement Income Statement Limitations Income measurement involves judgment. Income is affected by the accounting methods employed. 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. Income Statement Income Statement 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....
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This note was uploaded on 11/29/2011 for the course ACC 375 taught by Professor Lash during the Spring '11 term at Rutgers.

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Chapter 4 - 1. 1. Understand the uses and limitations of an...

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