BU127 Chapter Notes - Chapter 3: Deferred Income, Asset Turnover, Accounting Equation
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BU127 Full Course Notes
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Chapter 3: operating decisions and the statement of earnings. Until a company ceases activities, the operating cycle repeats continuously: purchase goods and services (beginning of cycle, pay cash to suppliers, sell goods and services to customers, receive cash from customers (end of cycle) To meet the needs of decision makers, nancial information must be reported in relatively short time periods. Periodicity assumption: the long life of a company can be reported in shorter time periods (months, quarters, and years) The statement of earnings includes three major sections: results of continuing operations, results of discontinued operations, earnings per share. Note: net earnings is the sum of 1 and 2. Section of the statement that presents the results of continuing operations (revenues and expenses) Revenues: income resulting from the sale of goods or services. Increases in assets or settlement of liabilities from ongoing operations. When revenues are earned, assets, usually cash or trade receivables, often increase.
