MGT220H5 Chapter 4: chapter 4 readings.docx
Document Summary
Chapter 4: reporting financial performance e. g. income = 800,000 x 40% = net income 32000 net income tax. 2 types of financing in canada debt(bonds, bank loans) and equity (issue shares) If there is an error in the prior period correction made thru retained earnings it is net of tax. Correction of errors in prior periods and effects to prior periods from accounting policy changes are treated as prior period adjustments. Income statement (aka comprehensive income) = report that measures success of company"s operations for specific time period. 3 business activities: financing (borrowing, issuing shares, etc), investing (buy assets and invest in people), operating (using assets to earn profits) performing these activities, firm exposed to different levels of risk and opportunities. Income tax expense: operating (rev, exp, non operating (gain/loss) 3: total : income from continuing operation, discontinued operation, total: net income, other comprehensive income. Assist in predicting future performance (i. e. , predictive value)
