COMM 293 Lecture Notes - Lecture 3: Accounting Information System, Income Statement, Weighted Arithmetic Mean
Document Summary
Understanding the business: companies should develop objectives and plans to achieve their goals. Projecting income statement items is important to the achievement of targeted performance. The operating cycle: the operating cycle is the cash-to-cash cycle (earnings process). The motive of a business is to turn cash into more cash. The length of time for a company"s operating cycle depends on the nature of its business: the operating cycle is not the same as the accounting cycle. These cycles do not coincide in terms of time. Cash payments and receipts often do not coincide with the accounting cycle recognition rules: timelines are useful tools for considering both the operating cycle and the accounting cycle of a business. Timelines focus on timing issues as well as measurement issues. Elements on the income statement: four main sections: Reflects the results from that part of operations that are ongoing. Reflects the results from that part of the operations that management has committed to dispose.
