Lecture 7 income statement rw (2)

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<ul><li> 1. Reporting Performance<br />Income Statement and Statement of Cash Flow<br /></li></ul> <p> 2. Balance Sheet shows where I am now<br />Balance Sheet shows where I was<br />Cash Flow explains how cash changed<br />Assets<br />Liabilities<br />&amp;<br />Equity<br />Cash<br />Cash Flow Statement<br />Assets<br />Liabilities<br />&amp;<br />Equity<br />Cash<br />Income Statement shows how I got there<br />Income Statement<br /> 3. Income Statement<br />Income Statement: measures performance over a certain period of time<br />Compares inflows (Revenue or Sales) with outflows (Costs or Expenses)<br />Revenue Expenses = NetIncome<br /> 4. Financial Statements<br /> 5. Personal Income Statement<br /> 6. Business Income Statement<br />A business income statement reports on operating and non-operating activities. <br />It lists amounts for revenues less expenses over a period of time. <br />Sales less expenses yield the bottom-line net income amount.<br /> 7. Income Statement Components<br />Revenues: value received from the exchange of goods or services to customers<br />Expenses:cost of doing business; assets and resources used to provide those revenues<br />Net income: revenues less the expenses associated with getting those revenues<br /> 8. 80<br /> 9. Income Statement is on Accrual Basis<br /></p> <ul><li>The Accrual Income Statement reflects the economics of the tradewith the customer </li></ul> <p> 10. Revenue is the value of what the company gives to the customer, regardless of when it gets paid.Customer gives back Cash<br />or <br />Accounts Receivable (cash later)<br /></p> <ul><li>Expenses are the value of the resources usedto produce whatever it is that was traded </li></ul> <p> 11. Might be paid for before used, when used or paid later</p>