Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
12 Cards in this Set
- Front
- Back
|
What is an income statement?
|
The report that measures the success of company operations for a given period of time.
(Statement of income, statement of earnings) |
|
|
What are the three main ways an income statement helps users of financial statements to predict cash flows?
|
Evaluate past performance
Provide a basis for predicting future performance Help assess the risk or uncertainty of achieving future cash flows. |
|
|
What is earnings management?
|
Often defined as the planned timing of revenues, expenses, gains, and losses to smooth out bumps in earnings.
|
|
|
What is the transaction approach?
|
A method of income measurement, focuses on the income-related activities that have occurred during the period.
|
|
|
What are revenues?
|
Inflows or other enhancements of assets of an entity or settlements of its liabilities during a period from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations.
Sales, fees, interest, dividends, and rent. |
|
|
What are expenses?
|
Outflows or other using-up of assets or incurrences of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major or central operations
Cost of goods sold, depreciation, interest, rent, salaries and wages, and taxes. |
|
|
What is a gain?
|
Increases in equity (net assets) from peripheral or incidental transactions of an entity except those that result from revenues or investments by owners.
|
|
|
What is a loss?
|
Decreases in equity (net assets) from peripheral or incidental transactions of a entity except those that result from expenses or distributions to owners.
|
|
|
What is a single-step income statement?
|
The single-step statement consists of just two groupings: revenues and expenses.
|
|
|
What is a multiple-step income statement?
|
This statement separates operating transactions from non-operating transactions, and matches costs and expenses with related revenues.
It highlights certain intermediate components of income that analysts use to compute ratios for assessing the performance of the company |
|
|
What is an operating section?
|
A report of the revenues and expenses of the company's principal operations.
|
|
|
What are discontinued operations?
|
Occurs when two things happen: a) A company eliminates the results of operations and cash flows of a component from its ongoing operation
b) There is no significant continuing involvement in that component after the disposal transaction. |
