lecture 7 income statement rw (2)

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  • 1. Reporting Performance
    Income Statement and Statement of Cash Flow

2. Balance Sheet shows where I am now
Balance Sheet shows where I was
Cash Flow explains how cash changed
Assets
Liabilities
&
Equity
Cash
Cash Flow Statement
Assets
Liabilities
&
Equity
Cash
Income Statement shows how I got there
Income Statement
3. Income Statement
Income Statement: measures performance over a certain period of time
Compares inflows (Revenue or Sales) with outflows (Costs or Expenses)
Revenue Expenses = NetIncome
4. Financial Statements
5. Personal Income Statement
6. Business Income Statement
A business income statement reports on operating and non-operating activities.
It lists amounts for revenues less expenses over a period of time.
Sales less expenses yield the bottom-line net income amount.
7. Income Statement Components
Revenues: value received from the exchange of goods or services to customers
Expenses:cost of doing business; assets and resources used to provide those revenues
Net income: revenues less the expenses associated with getting those revenues
8. 80
9. Income Statement is on Accrual Basis

  • The Accrual Income Statement reflects the economics of the tradewith the customer

10. Revenue is the value of what the company gives to the customer, regardless of when it gets paid.Customer gives back Cash
or
Accounts Receivable (cash later)

  • Expenses are the value of the resources usedto produce whatever it is that was traded

11. Might be paid for before used, when used or paid later