Income statement is one of the most important of financial statements and it’s also known as profit and loss statement. It is also known as statement of operations and statement of income. The income statement shows the degree of profitability of a company in
Income Statement a financial statement that gives operating results for a specific period.
Depreciation is one of the basic accounting terms that is applied to the degree of wear and tear that happens to a firm’s assets. With the help of depreciation accountants can calculate whether it is time to replace the assets or not. It also
There are different kinds of financial statements for reporting cash flows in a business such as income statement and statement of cash flows. These cash flows statements are different from balance sheet in a respect that they report the flow of cash for a
Cash Flow Statement Example – Direct and Indirect Method: Unlike the major financial statements, cash flow statement is not prepared from the adjusted trial balance. The information to prepare this statement usually comes from three sources: Comparative balance sheets provide the amount of the
Predetermined Overhead Rate and Capacity: Companies typically base their predetermined overhead rates on the estimated, or budgeted, amount of allocation base for the upcoming period. This is the method that is used in this chapter, but it is practice that is recently come under
Vertical Analysis and Common Size Statements: Definition and Explanation of Vertical Analysis and Common Size Statements: Vertical analysis is the procedure of preparing and presenting common size statements. Common size statement is one that shows the items appearing on it in percentage form as
Variable Costing System A Decision Making Tool for Management: After studying this chapter you should be able to: Explain how variable costing differs from absorption costing and compute unit product costs under each method Prepare income statements using variable and absorption costing. Reconcile variable
Recording Non-manufacturing Costs in a Job Order Costing System: In addition to manufacturing costs, companies also incur marketing and selling costs. These costs should be treated as period expenses and charged directly to the income statement and therefore should not go into the the
Recognition of Net Revenue Method–By Product Costing: This method recognizes the need for assigning some cost to the by-product. It does not attempt, however, to allocate any main product cost to the buy product. Any expenses involved in further processing or marketing the by-product
Profit and Loss Account in Statement Form/Income Statement: Trading and profit and loss account/income statement may be prepared either in account form (T form) or in report form (statement form). Trading and profit and loss account in both the forms give the same information.
Contribution Margin and Basics of Cost Volume Profit (CVP) Analysis: Learning Objectives: Define and explain contribution margin. Prepare a contribution margin format income statement. What are the advantages of calculating contribution margin? Definition and Explanation of Contribution Margin: Contribution margin is the amount remaining
Income Statement Definition: Income statement is the summary of a management’s performance as reflected in the profitability (or lack of it) of a firm over a certain period. It itemizes the revenues and expenses of past that led to the current profit or loss,
Financial Statement Analysis Learning Objectives: Prepare and interpret financial statements in comparative and common-size form. Compute and interpret financial ratios that would be most useful to a common stock holder. Compute and interpret financial ratios that would be most useful to a short-term creditor