Ch. 4 Flashcards
Financial reporting focuses on the ____
Past
revenues- expenses
net income
A limitation of the Income Statement
companies omit items that cannot be measured reliably
Quality of earnings decreases if information
loses usefulness
Revenues
money from providing a service or good
Expenses
outflows from purchasing or using up prepaid assets
gains
increases in equity from peripheral or incidental transactions
losses
decreases in equity from peripheral or incidental transactions
Multi- Step income statement
separates operating transactions from non-operating transactions
Disadvantage of single-step income statements
No implication that a type of revenue or expense has any priority over another
Unusual
high degrees of abnormality
infrequency
types of transactions not reasonably expected to recur
Discontinued operations
when a company eliminates the results of operations of a component of the business.
Intraperiod tax allocations
income from continuing operations or discontinued operations
non-controlling interest
the portion of equity interest in a subsidiary not attributable to the parent company
earnings per share
significant business operator
Retrospective Adjustment
changes in accounting principles
prospective
changes in accounting estimates
Restrictions on retained earnings
disclosed in the notes to the financial statements
Comprehensive Income
all changes in equity during a period except those resulting from investments by owners and distributions to owners
One step Comprehensive approach Income Statement
does not require the creation of a new financial statement
