Ch. 4 (IFSA) Learning Outcomes

Question 1

Describe the components of the income statement and the alternative presentation formats of that statement.

Question 2

Discuss the general principles of revenue recognition and accrual accounting, specific revenue recognition applications (including accounting for long-term contracts, installment sales, barter transactions, gross and net reporting of revenue), and the implications of revenue recognition principles for financial analysis.

Question 3

Distinguish between the operating and nonoperating components of the income statement.

Question 4

Discuss the financial reporting treatment and analysis of nonrecurring items, including discontinued operations, extraordinary items, unusual or infrequent items, and changes in accounting standards.

Question 5

Describe the components of earnings per share and calculate a company’s earnings per share (both basic and diluted earnings per share) for both a simple and complex capital structure.

Question 6

Evaluate a company’s financial performance using common-size income statements and financial ratios based on the income statement.

Question 7

State the accounting classification for items that are excluded from the income statement but affect owners’ equity, and list the major types of items receiving that treatment.

Question 8

Describe and calculate comprehensive income.