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Chapter 4: Income Statement and Related Information Summary by Study Objective Objective 1: Understand the uses and limitations of an income statement. What do investors and creditors use the income statement to do? What are limitations of the income statement? How does “earnings management” affect the “quality of earnings”? Objective 2: Prepare a single-step income statement. What elements are included on the income statement? Explain the format of a single-step income statement. Objective 3: Prepare a multiple-step income statement. List the components of a multiple-step income statement. 1. 2. 3. 4. 5. 6. Objective 4: Explain how to report irregular items. Explain the placement on the income statement of the following irregular items. (Hint: see table on page 148). Discontinued operations: Extraordinary items: 1
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Unusual gains and losses: Changes in accounting principle: Changes in estimate: Corrections of errors: What 2 parts are included in the reporting of a discontinued operation? What 2 criteria must be met for an item to be considered extraordinary?
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Unformatted text preview: Give some examples of items are usual or infrequent but not both. Give some examples of changes in accounting principle. What period does a change in estimate effect? Objective 5: Explain intraperiod tax allocation. What does “intraperiod tax allocation” mean? What items on the income statement use intraperiod tax allocation? Objective 6: Indentify where to report earnings per share information. State the formula for earnings per share. EPS= What line items must EPS be shown for? 2 Objective 7: Prepare a retained earnings statement. What items are shown on a retained earnings statement? For what reasons might retained earnings be restricted? Objective 8: Explain how to report other comprehensive income. Define comprehensive income. What are the 3 ways to disclose comprehensive income in the financial statements? 1. 2. 3. Where is “Accumulated Other Comprehensive Income” included in financial statements? 3...
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This note was uploaded on 02/12/2012 for the course ACCT 3001 taught by Professor Moffitt during the Spring '08 term at LSU.

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