BU227 Lecture Notes - Lecture 3: International Financial Reporting Standards, Income Statement, Gross Profit
Document Summary
How business activities affect the income statement income statement provides the basis for comparing analysts" projections to results of operations: not a snapshot this is a report over a period of time. When they receive cash from customers, they pay off liabilities. Elements of the income statement: classification of various income statement items helps financial statement users assess the, continuing operations: Single step format: list all revenues, then all expenses, and show difference between the presents the results of continuing operations. Multiple step format: gross margin is shown, then operating profit (income) as a second. Gross profit (gross margin): net sales cogs. Operating profit = gross profit other operating expenses. Operating revenues: increases in assets or settlement of liabilities from ongoing operations: sometimes, a company receives cash for a promise to provide goods in the future. Here, revenue is not earned, but a liability account (deferred revenue) is created.
