Finance 2013 Sept10 Accounting(1)

Operations the income statement is compiled on an the

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Unformatted text preview: rm’s operations over a specified time interval. operations The Income Statement is compiled on an The accrual rather than a cash basis – attempt is accrual cash made to match revenues with related expenses. (Note: Net Income vs. Cash Flow) expenses. Three types of activities represented: 1. The cost of producing or acquiring goods or services 2. The expenses incurred in marketing/distributing the The product or service and administrative expenses product 3. The financing cost of doing business INCOME STATEMENT INCOME Fiscal Year 2006 GROSS REVENUE (SALES) Less Discounts NET REVENUE/SALES PROFITABILITY LEVELS Gross Margin COST OF GOODS SOLD Labor Materials Overhead (e.g., Depreciation) GENERAL & ADMINISTRATIVE Operating Earnings (Income, Profit) Before Interest & Tax EBIT Marketing/Advertising Finance Legal & Other RESEARCH & DEVELOPMENT INTEREST INCOME/EXPENSE (Net) EBT INCOME TAX “NET” INCOME NET INCOME Capital Expenditures Capital Conceptually, the cost of property, plant and Conceptually, equip...
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