AGED 260 Lecture Notes - Lecture 5: Kfc, Net Income, Earnings Before Interest And Taxes
15 Dec 2017
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Document Summary
Kfc sells a chicken fryer for . Record no revenue because it is not a central operation but you record gains. Matching principle first- expense recorded in the same period as the revenue the expense helps to generate. If difficult to pin down the casual relation between revenue and expenses: allocate it over several period. Depreciation expense: expense it as incurred. Ability of reported earnings (income) to predict a company"s future earnings: permanent earnings- likely to continue to the future, transitory earnings-not likely to continue to the future. Operating income-directly related to the primary activities. Operation- component whose cash flows can be clearly distinguished from the rest of the company. Discontinued operation- disposal represents a strategic shift that has, or will have, a major effect on the company"s operations and financial results: reported below income from continuing operations. Ely company sold division a, a component of its operations, before the end of 2015.
