Flashcards in Income Statement Deck (16):
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?
1. Prior period adjustments
2. Foreign currency translation adjustments
3. Unrealized gains and losses on available for sale (AFS) securities
4. Unrecognized pension items
5. Cumulative effect of changes in accounting principle
6. Unrealized gains and losses on cash flow hedges
What is the order of income statement presentation?
1. Income from Continuing Operations
2. Income from discontinued operations (net of tax)
3. Extraordinary items (net of tax)
4. 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?
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.