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Introduction to financial accounting hkust

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Unformatted text preview: er product or provide service to customers on credit. Chapter Three Receive payment from customers. And pay suppliers. Slide 10 of 74 The Operating Cycle Company Name Southwest Airlines General Motors Eli Lilly Corp Hewlett-Packard Co Target Pacific Gas & Electric Co Yum Brands Inc Kroger Co Amazon.com Inc Chapter Three Introduction To Financial Accounting HKUST Industry Airlines Auto Manufacturer Pharmaceutical Manufacturer Retailer Utility Restaurant Grocery Retailer Online Retailer Operating Cycle 14 days 342 days 339 days 110 days 96 days 91 days 12 days 45 days 22 days Slide 11 of 74 Underlying Accounting Assumptions Introduction To Financial Accounting HKUST Time Period: The long life of a company can be g p y reported over a series of shorter time periods. Recognition Issues: When should the effects of operating activities be recognized (recorded)? Measurement Issues: What amounts should be recognized? Chapter Three Slide 12 of 74 Reporting Income Introduction To Financial Accounting HKUST Income is a salient measure of performance used by: Investors (to predict future performance) Creditors (to determine the likelihood that you are creditworthy) Boards of directors (to determine management compensation) Chapter Three Slide 13 of 74 Elements on the Income Statement Revenue Increases in assets or settlement of liabilities from delivering or producing goods, rendering services, or other activities that constitute the ongoing major or central operations. Introduction To Financial Accounting HKUST Expense Outflows or other using up of assets/or incurrence of liabilities from delivering or producing goods, rendering services, or other activities that constitute the ongoing major or central operations. . Gains Increase in net assets from peripheral or incidental transactions and p p from all other transactions and events except those that result from revenues or investment by owners. . Revenues - Expenses + Gains - Losses = NI Losses Decrease in net assets from peripheral or incidental transactions and from all other transactions and events except those that result from revenues or investment by owners. Chapter Three Slide 14 of 74 Papa John's Primary Operating Activity is selling pizza and selling franchises. Introduction To Financial Accounting HKUST Papa John's International, Inc. and Subsidiaries Consolidated Statement of Income For the Year Ended December 31, 2006 (dollars in thousands) Revenues Restaurant and commissary sales Franchise royalties and development fees Total revenues Costs and expenses Cost of sales Salaries and benefits expense General and administrative expenses Total costs and expenses Operating income Other revenues and gains (expense and losses) Investment income Interest expense Income before income taxes Income tax expense Net income Earnings per share $ 884,000 117,000 1,001,000 425,000 164,000 314,000 903,000 98,000 1,000 (3,000) 96,000 33,000 63,000 1.96 Slide 15 of 74 Operating Activities Peripheral Activities $ $ Chapter Three Papa John's Primar...
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This note was uploaded on 02/13/2012 for the course ACCT 101 taught by Professor Na during the Fall '10 term at HKUST.

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