Shouldthesellerrecognizethe

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Unformatted text preview: ge Business Publishers, 2013 Income Statement An income statement reports on operating activities. It lists amounts for sales (and revenues) less all expenses (and costs) over a period of time. Sales less expenses yield the “bottom­line” net income amount. ©Cambridge Business Publishers, 2013 Berkshire Hathaway’s Income Statement ©Cambridge Business Publishers, 2013 Net Income as a Percent of Sales ©Cambridge Business Publishers, 2013 Walgreen’s ©Cambridge Business Publishers, 2013 Initial Questions about the Income Statement ■ Assume that a company sells a product to a customer who promises to pay in 30 days. Should the seller recognize the sale when it is made or when cash is collected? ■ When a company purchases a long­term asset such as a building, its cost is reported on the balance sheet as an asset. Should a company, instead, record the cost of that building as an expense when it is acquired? If not, how should a company report the cost of that asset over the course of its useful life? Manufacturers and merchandisers report the...
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