F1M2 Flashcards
Uses of income statement
determine profitability value and creditworthiness
Gross Concept
normal/operating; revenues and expenses are recognized on separate line items
Net concept
gains/losses; nonoperating; proceeds less net book value
Multistep income statement
operating revenues and expenses are reported separately from nonoperating revenues and expenses
selling expenses
freight out, salaries and commissions, and advertising
general and admin
officer’s salaries, accounting and legal, insurance
non operating
auxiliary activities, interest expense
discontinued operations
reported net of tax; highly irregular
core business
net sales, COGS, selling expenses, g&a expenses, and depreciation expense
Net sales to income from operations
core business
non operating
other rev/gain or exp/losses; unusual or infrequent
Single step income statement benefits
simple design and presentation; one item does not appear more important than others
on the income statement, revenue is reported as
net of returns and discounts
balance sheet
financial risk (capital structure)
classified balance sheet
distinguishes current and non current assets and liabilities
