chapter 5: preparing the income statement
profit before income taxes * tax rate
income tax expense equation
total operating expenses - sales
operating profit equation
operating income - non-operating expenses
profit before income taxes equation
other comprehensive income
the account that includes changes in carrying value of certain assets and liabilities that end up changing retained earnings
revenues expenses costs of goods sold operating expenses other non-operating items discontinued operations
the order to display the income statement
net income + other comprehensive income = comprehensive income
comprehensive income equation
gross margin - sales - cost of sales
cost of goods sold equation
1. the consumption of the asset results from a transaction that lead to the recognition of revenue 2. the consumption of the asset resulted from the passage of time
criteria for expense recognition