Slides – Accounting Intake 52

ordinary activities of an entity when those inflows result in increase in equity, other than increases relating to contributions from equity participants..  To be recognized when ear[r]

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Analysis

6

CHAPTER

Income Statement

To list sources of revenues and expenses

incurred in a period

Revenue recognition

 To be the gross inflow of economic benefits during the period arising in the course of the

ordinary activities of an entity when those inflows result in increase in equity, other than increases relating to contributions from equity participants

Expenses recognition

 To be the gross outflow of economic benefits during the period arising in the course of the ordinary activities of an entity when those

outflows result in decrease in equity, other than decreases relating to withdraws from equity

participants

Revenues vs Gains

Revenues

• To be earned inflows or

prospective inflows of cash from operations.

• To be expected to

recur.

Gains

• To be recognized

inflows or prospective inflows of cash

from non-operations.

Expenses vs Losses

Expenses

• To be incurred

outflows, prospective outflows, or allocations of past outflows of cash from operations.

Losses

• To be decreases in a

company’s net assets arising from

Components of Net Income

• Net income—widely regarded as “bottom line” measure of income

• Comprehensive income includes most changes to equity that result from non-owner sources

• Continuing income excludes extraordinary items, cumulative effects of accounting changes, and the

effects of discontinued operations from net income

• Core income excludes all non-recurring items from net income