MGAB01H3 Chapter Notes - Chapter 3: Financial Statement, Deferred Income, Gross Margin

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21 Mar 2016
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To measure net earnings for a specific period of time, accountants follow the periodicity assumption, which assumes that the long life of a company can be reported in shorter time period. Statement of earnings is main part of statement of comprehensive income. Statement of earnings includes three major sections: results of continuing operations, results of discontinued operations, earnings per share. All companies report section 1 & 3, some companies report section 2. Revenues: increases in assets or settlements of liabilities from ongoing operations of the business. Results from the sale of goods or services. When revenues are earned, assets, usually cash or trade receivables, often increase. Deferred revenue: a liability account that"s created when a company receives cash in exchange for a promise to provide goods or services in the future. Expenses: decreases in assets or increases in liabilities from ongoing operations and are incurred to generate revenues during the period. Expenditure: any outflow of cash for any purpose.

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