Bài giảng môn Kế toán, kiểm toán - Chapter 9: The income statement and the statement of cash flows

© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.Chapter 9The Income Statement and the Statement of Cash FlowsPowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W. Caldwell, D.B.A., CMA Jon A. Booker, Ph.D., CPA, CIA Cynthia J. Rooney, Ph.D., CPALearning Objectives3After studying this chapter you should understand and be able to:Explain what revenue is and what the two criteria are that permit revenue recognition.Describe how cost of goods sold is determined under both perpetual and periodic inventory accounting systems.Discuss the significance of gross profit and describe how the gross profit ratio is calculated and used.Identify the principal categories and components of “other operating expenses” and show how these items are reported on the income statement.Explain what “income from operations” includes and why this income statement subtotal is significant to managers and financial analysts.Describe the components of the earnings per share calculation and discuss the reasons for some of the refinements made in that calculation.Compare and contrast the alternative income statement presentation models.Discuss the meaning and significance of each of the unusual items that may appear on the income statement.Describe the purpose and outline the general format of the statement of cash flows.Illustrate the difference between the direct and indirect methods of presenting cash flows from operating activitiesSummarize why the statement of cash flows is significant to financial analysts and investors.9-3 Revenue is generated when a firm sells a product or provides a service to a client or customer and receives cash, creates an account receivable, or satisfies an obligation.Revenue is generally measured by the amount of cash received or expected to be received from a transaction.Income StatementL O 19-4Revenue5Revenue is realized when the product or service has been exchanged for cash, claims to cash, or an asset that is readily convertible to a known amount of cash.Revenue is earned when the firm has completed, or substantially completed, the activities it must perform to be entitled to the revenue benefits.Companies should disclose unusual revenue recognition methods, such as percentage-of-completion or installment methods.L O 19-5Shipping Terms6FOB Shipping PointFOB DestinationSellerBuyerMerchandiseCarrierOwnership transfers to buyer when merchandise is passed to carrier, and the buyer pays the shipping costs.Ownership transfers to buyer when merchandise is passed to buyer, and the seller pays the shipping costs.L O 29-6Expenses7Outflows or other using up of assets or incurring liabilities from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity’s ongoing central operations.Some expenses are recognized concurrently with the revenues to which they relate (matching principle).Some expenses are recognized in the period in which they are incurred (administrative salaries).Some expenses result from an allocation of the cost of an asset to the period (depreciation).L O 49-7Operating Expenses8L O 49-8Multiple-Step Income Statement9L O 59-9Income Statement Alternatives10Single-Step Multiple-StepL O 79-10Gains and LossesIncreases (gains) or decreases (losses) in an entity’s net assets result from nonoperating activities. Gains/losses are usually reported as other income and excluded from operating income.L O 89-11Statement of Cash Flows12Provides relevant information about the cash receipts and cash payments of an enterprise during a period. This statement shows why cash and cash equivalents changed during the period by reporting net cash provided or used by . . .OperatingActivitiesInvestingActivitiesFinancingActivitiesL O 99-12Cash Inflows and OutflowsInvesting ActivitiesOperating ActivitiesFinancing ActivitiesSale of operational assetsSale of investmentsCollections of loansCash received from revenuesIssuance of stockIssuance of bonds and notesEnterprisePurchase of operational assetsPurchase of investmentsLoans to othersCash paid for expensesPayment of dividendsRepurchase of stockRepayment of debtCash OutflowsL O 99-13Cash Flows from Investing and Financing ActivitiesInvesting activities relate primarily to the purchase and sale of noncurrent assets, such as land, buildings, or equipment. Investments in debt or equity securities of other entities are also shown as investing uses. The lending of money and subsequent collection of loans are considered investing activities as well.L O 109-14Interpreting the Statement of Cash Flows 15A business entity should have positive cash flows from operating activities. If operating activities do not generate cash, the entity must look to outside parties for funds to meet its day-to-day activities.L O 119-15End of Chapter 99-16