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24 Understanding Income Statement (Accrual accounting & revenue…
24 Understanding Income Statement
Income Statement format and companents
Components
Revenues (sales)
Expenses
Gain or Loss
Non controlling interest (Minority interest)
Net income
Presentation Formats
Single-format
All expenses are grouped after all incomes.
Multi-format
Subtotals
Gross profit/margin
Operation profit/ income / EBIT
Unusual or infrequent items (nonrecurring items)
Extraordinary items (presented on net of tax)
Discontinued operations (presented on net of tax)
Accounting changes (notes)
Accrual accounting & revenue recognition
under the accrual method of accounting
Accounting Standards
the International Accounting Standards Board (IASB)
the Financial Accounting Standard Board (GAAP)
Revenue Recognition
LT Contract
Installment Sales
Barter transaction
Gross and Net Reporting of Revenue
Implications for Financial Analysis
Earnings per share (EPS)
Earnings per share (EPS)
Basic EPS
Diluted EPS
Diluted EPS-Options or Warrants
Comprehensive Income
Retained earnings
Other comprehensive income (OCI)
above the line
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below the line (presented on net of tax)
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#
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