BUSN1001 Lecture Notes - Lecture 6: Finance Lease, Retained Earnings, Comprehensive Income
Document Summary
Statement of comprehensive income: comprehensive income refers to all changes in equity during the reporting period other than those resulting from transactions with owners as owners (such as dividends and capital contributions) Statement of changes in equity: profit, other comprehensive incomes, transaction with equity holders e. g. share issues, shares buy-backs, dividends, transfers between equity accounts. Income and expense accounts are closed to the profit or loss summary account and from there added to the retained earnings at start of period via the so called (cid:498)closing entries(cid:499) at the end of each reporting period. Cr profit and loss summary (difference between revenue and expense) Upward trend is advantageous for entity but a sustained high roe/roa attracts new competitors to industry and eventually erodes excess roe/roa. Profit(loss) = profit available to owners + income tax expense + finance expense. Asset turnover ratio: shows an entity"s overall efficiency in generating income per dollar of investments in assets.
