Chapter 3 lecture notes

Chapter 3 lecture notes - Chapter 3 Accrual Accounting...

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Chapter 3 Accrual Accounting, Income Statement and the Recording Process A. Income Statement 1. Elements on the Income Statement 1 o Revenues: 2 1 o Expenses: 2 1 o Other revenues (gains), Other Expenses (losses): 2 1 o Income tax: 2 1 o Earnings per share: In the single-step income statement, all of the revenues are listed together, and all of the expenses are subtracted to derive net income. In the Multi-step income statement, subtotals such as operating income and income before income tax are presented. 2. Sample Income Statement Format: Company Name Income Statement Accounting period Unit of measure Revenues (inflows of net assets from normal ongoing operations) When revenues are recognized assets increase or liabilities decrease (or both) Sales revenue Service revenue Total revenue Expenses (outflows of net assets from normal ongoing operations) When expenses are recognized, assets decrease or liabilities increase (or both) Cost of goods sold Rent expense Depreciation expense Salaries and Benefits expense Insurance expense Utilities expense Total operating expenses ACC U201 Spring 2008
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Other revenues, gains, expenses, and losses (inflows or outflows of net assets from non-operating activities) Investment income Interest expense Gain/loss on sale of assets Income before taxes (the last expense listed on the income statement for profit- making corporations) Income tax expense Net Income Earnings per share (for the accounting period) Required disclosure on corporate income statements EPS= Net Income . Weighted average number of shares
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Chapter 3 lecture notes - Chapter 3 Accrual Accounting...

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