CH 7: 7 Operating Decisions Flashcards
expenses count as
SE
operating cycle
Begins when the company receives good to sell, continues when company pays for it and sells to customers and ends when customers pay for the goods with cash
is accruel basis required by gaap
yes
in the accruel basis when is things recorded
Rev- revenue is recognized when goods and services are provided to customers
Exp- exp recognized win the same period with revenues that they relate to regardless of cash is paid
Operating activities
revenue or expenses relating to a companies daily activities
Operating revenue
amts earned and recorded from companies daily activities (selling goods)
Operating expenses
costs of operating the business to earn revenue
income from operations
operating revenue-operating expenses
what is other activities on the income statement
rev/exp from activities not central to ongoing operations and recorded separately as other items
Interest expense, gains/losses, sale of investments, etc
Income/Loss Before Taxes or Pretax Income
Income from operations +/- other activities
Income tax expense is written as
a seperate item
Earnings per share
ratio is used to evaluate companies operating performance
Net income/weighted avg number of shares of common stock
revenues
credit balance (inc assets/dec lia)
expenses
debit balance (dec assets/inc lia)
net income
rev-exp
