BU127 Chapter 3: BU127 Chapter 3 Notes.docx
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BU127 Full Course Notes
Verified Note
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Document Summary
Operating cycle: the system has 4 main steps, purchase goods and services, pay cash to suppliers, sell goods and services to customers, receive cash from customers, start at 1. Elements of the income statement: measurement issues: what amounts should be recognized, classification of the various income statement items helps financial statement users assess the company"s operating performance and predict its future profitability, major sections the income statements includes, results of continuing operations, results of discontinued operations profit (the sum of 1 and 2, earnings per share. Operating expenses: expenses: are decreases in assets or increases in liabilities to generate revenues during the period, expenditures: is any outflow of cash for any purpose, whether to buy equipment, pay off a bank loan or pay employees their wages, gross profit (gross margin): is net sales less cost of goods sold, operating profit: (profit from operations) equals net sales less cost of goods sold and other operating expenses.
