Quality of earnings income statement example cake 4 8

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Chapter 4 / Exercise EX4-26
Accounting
Reeve/Warren
Expert Verified
Quality of EarningsIncome Statement (example: CAKE)
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Accounting
The document you are viewing contains questions related to this textbook.
Chapter 4 / Exercise EX4-26
Accounting
Reeve/Warren
Expert Verified
4-8Why do companies manage earnings?Why do companies manage earnings?
4-9What activity triggers revenue recognition? Examples, tuition, contracts, point of sale, etc. (page 59)LO 1 Understand the uses and limitations of an income statement.Matching“Let the expenses follow the revenues” (Page 58)Revenue RecognitionIncome Measurement
4-101.Understand the uses and limitations of an income statement.2.Describe the content and format of the income statement.3.Prepare an income statement.4.Explain how to report various income items.5.Identify where to report earnings per share information.6.Understand the reporting of accounting changes and errors.7.Prepare a retained earnings statement.8.Explain how to report other comprehensive income.After studying this chapter, you should be able to:Income Statement and Related Information4LEARNING OBJECTIVESLEARNING OBJECTIVES
4-11Format of the Income StatementLO 2 Describe the content and format of the income statement.Revenues– Inflows or other enhancements of assets or settlements of its liabilities that constitute the entity’s ongoing major or central operations.SalesFee Interest Examples of Revenue AccountsElements of the Income StatementDividend Rent
4-12Format of the Income StatementExpenses– Outflows or other using-up of assets or incurrences of liabilities that constitute the entity’s ongoing major or central operations.Examples of Expense AccountsElements of the Income StatementCost of goods soldDepreciation InterestRent Salaries and wagesTaxesLO 2 Describe the content and format of the income statement.
4-13Format of the Income StatementGains and lossescan result fromsale of investments or plant assets, settlement of liabilities, write-offs of assets.Elements of the Income StatementGains– Increases in equity (net assets) from peripheral or incidental transactions.Losses- Decreases in equity (net assets) from peripheral or incidental transactions.LO 2 Describe the content and format of the income statement.
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