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Chapter 3 Lecture.doc - CHAPTER 3 OPERATING DECISIONS AND...

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CHAPTER 3OPERATING DECISIONS AND THE ACCOUNTING SYSTEMLearning Objectives1.Describe a typical business operating cycle and explain the necessity for the time period assumption.2.Explain how business activities affect the elements of the income statement.3.Explain the accrual basis of accounting and apply the revenue realization and matching principles to measureincome.4.Apply transaction analysis to examine and record the effects of operating activities on the financialstatements.5.Prepare a classified income statement.6.Compute and interpret the net profit margin ratio.Chapter Take-Aways1. Describe a typical business operating cycle and explain the necessity for the time period assumption.
2. Explain how business activities affect the elements of the income statement.
3. Explain the accrual basis of accounting and apply the revenue realization and matching principles tomeasure income.
4. Apply transaction analysis to examine and record the effects of operating activities on the financialstatements.
1
REVENUES(manyaccounts)EXPENSES(many accounts)+credit+debit

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Term
Spring
Professor
Yang
Tags
Generally Accepted Accounting Principles, Operating Income and Income

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