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Int. Acct. I
Ch. 3: The IS, Related Information and Revenue Recognition
Term | Definition |
---|---|
income statement | the report that measures the success of company operations for a given period of time. It is also often called the statement of income or statement of earnings |
revenues | inflows or other enhancements of assets of an entity or settlements of its liabilities during a period from delivering or producing goods, rendering services, or other activities that constitute the entity’s ongoing major or central operations |
expenses | outflows or other using-up of assets or incurrences of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity’s ongoing major or central operations. |
gains | increases in equity (net assets) from peripheral or incidental transactions of an entity except those that result from revenues or investments by owners. |
losses | decreases in equity (net assets) from peripheral or incidental transactions of an entity except those that result from expenses or distributions to owners. |
transaction approach | a method of income measurement that serves a summary of transactions and focuses on the income-related activities that have occurred during the period |
multiple step income statement | distinguishes operating from non-operating activities and includes several steps to calculate net income. |
earnings per share (EPS) | measures the number of dollars earned by each share of common stock. |
discontinued operations | result from the sale or disposal (elimination) of a component of a business through strategic shift. |
component | a part of an entity for which operations and cash flows are clearly distinguishable from the rest of the entity. The disposal of the component also represents a strategic shift in the company’s operations and financial results. |
intraperiod tax allocation | the process of associating income tax expense with related income for the current period, or “letting the tax follow the income.” |
comprehensive income | all changes in equity during a period except those resulting from investments by owners and distributions to owners |
earnings management | defined as the planned timing of revenues, expenses, gains, and losses to smooth out the bumps in earnings |
appropriated retained earnings | an account in which companies transfer the amount of restricted retained earnings |
statement of stockholders' equity | reports the change in the stockholders’ equity account and in total stockholders’ equity during the year |
columnar form | each account is establish into columns for the statement of stockholders equity |
change in accounting principle | when a company adopts a new accounting principle, such as |
changes in accounting estimate | change in an estimate such determining useful life or salvage values for depreciable assets, uncollectible receivables, inventory obsolescence, and the number of periods expected to benefit from a particular expenditure |