Anum Hussain AFM 291 Wednesday, December 01, 2010
A single step income statement says has one equation ▯Revenues – Expenses = Net Incom.
o All the accounts are put into one equation, (i.e., all revenues put under one account).
In IFRS it is a required disclosure to put the Earnings per share.
Income should be the same thing on the multistep income statement.
Multistep income statement
o Net Sales – COGS = Gross profit
o Operating expenses
o Income from operations ▯income tax expense that relates to this has already been
o Other Revenues and gains
o Other expenses and losses
o Income before income tax
o Income tax expense
o Net Income
o Earnings per share
Note that it is an IFRS company because it asks for statement of shareholder’s equity and not
statement of retained earnings (for which it would’ve been ASPE).
Prior period adjustment can be handled through an adjustment through opening retained earnings.
You can also adjust changes in accounting policies in this way.
So first like would be balance as reported, 2 line, adjustment, 3 line balance after adjustment.
We need to know the number of shares outstanding and authorized for the company.
Remember disclosures and how to make a balance sheet.
The contract based approach is a theoretical concept ▯just understand basics. Anum Hussain AFM 291 Wednesday, December 01, 2010
Earningsbased approach is used more practically ▯understand how to do.
Income has to be measureable and have high coll