Income Statement Flashcards
What is gross profit?
Gross profit is sales less cost of goods sold.
When should a contingency be accrued and recognized?
When the occurrence of the liability is probable and the amount can be reasonable estimated.
Cost of goods manufactured =
Cost of goods manufactured + finished goods beginning inventory - finished goods ending inventory = cost of sales.
What’s classified as extraordinary income?
An item that is BOTH unusual and infrequent which would then place it below income from continuing operations.
Does accounting income take a transactions-based determination of income or a change in het worth?
Accounting income is transaction based.
Where are unusual and infrequent items reported?
The must be separately reported if material as a component of income from continuing operations.
What is economic income?
The change in the net worth of a business enterprise during an accounting period.
What items are not shown on the income statement?
- Prior period adjustments
- Foreign currency translation adjustments
- Unrealized gains and losses on available for sale (AFS) securities
- Unrecognized pension items
- Cumulative effect of changes in accounting principle
- Unrealized gains and losses on cash flow hedges
What is the order of income statement presentation?
- Income from Continuing Operations
- Income from discontinued operations (net of tax)
- Extraordinary items (net of tax)
- Net income
What does the single-step income statement present?
Total revenue and gains less total expenses and losses.
Are extra ordinary items allowed in IFRS?
No
What does the multiple-step income statement present?
Includes multiple subtotals of revenues, expenses, gains, anded losses. (Sales - COGS = Gross Profit; Gross Profit - operating expenses = income from operations; Income from Operations + or - other income/expenses = Income B/F Taxes; BT - Taxes = Net Income)
What is other comprehensive income?
Net income + other comprehensive income items.
How are expenses classified under IFRS?
They are classified by business function or nature of the expense.
Is a separate statement of other comprehensive income one of the formats permitted under IFRS?
Yes, this in one of the formats permitted under IFRS.
