FAR: F1 M2

What are the 3 sections of a multiple step income statement?

1. Operating section (Income from operations) 2. Non-operating section (think other revenues ie interest revenue, other expenses ie interest expense, other gains ie sale of FA, other losses ie loss on sale) 2.5 Sum of #1 and #2 ^ = Net income ( or Income from Continuing operations) 3. our discontinued operations

A = L + E is what Financial statement?

Balance Sheet

What financial statement does this explain? "Shows performance for a point in time"

Balance Sheet

What does the balance sheet convey?

Financial Risk "Capital Structure" Do we have enough assets to cover our liabilities?

Which financial statement does this explain? "Shows performance for a period of time"

Income statement

What does the multiple step Income statement show separately?

Reports Operating revenues and expenses separately from non-operating revenues and expenses

Describe the single step income statement?

Revenues - Expenses = Net Income

What is the goal of the Income statement?

To provide information about the uses of funds in the income process. Shows our REGL - Revenues, Expenses, Gains, Losses

What does it mean to capitalize a cost?

We are spreading that benefit of the cost over the periods that it benefits (think a good version of depreciation)