Intermediate Accoun ng 1

Chapter 4 : income statement and related informa on

 Income statement: is the report that measures the success of company opera ons for a given
period of me.

‫ ھﻲ ﺗﻘرﯾر ﺗﻘوم ﻓﯾﮫ ﺑﻘﯾﺎس ﻣدى ﻧﺟﺎح ﺗﺷﻐﯾل اﻟﺷرﻛﺔ ﻓﻲ ﻓﺗرة ﻣﻌﯾﻧﺔ ﻣن اﻟزﻣن‬: ‫ﻗﺎﺋﻣﺔ اﻟدﺧل‬

 Is called :

1) statement of income

2) statement of earnings

 The income statement helps users of financial statements predict future cash flows in a
number of ways and this users are investors and creditors use the income statement
informa on

‫ﻗﺎﺋﻣﺔ اﻟدﺧل ﺗﺳﺎﻋد ﻣﺳﺗﺧدﻣﯾن اﻟﻘواﺋم اﻟﻣﺎﻟﯾﺔ ﻟﺗوﻗﻊ اﻟﺗدﻓﻘﺎت اﻟﻣﺎﻟﯾﺔ اﻟﻣﺳﺗﻘﺑﻠﯾﺔ و ھذول اﻟﻣﺳﺗﺧدﻣﯾن ھم اﻟﻣﺳﺗﺛﻣرﯾن و اﻟﻣﻘرﺿﯾن‬
‫اﻟذﯾن ﯾﺳﺗﺧدﻣون ﻣﻌﻠوﻣﺎت ﻗﺎﺋﻣﺔ اﻟدﺧل ﻟﻣﻌرﻓﺔ ﻣدى ﻧﺟﺎح اﻟﺷرﻛﺔ‬

 The first statement to prepare at the end of the accoun ng period is income statement

The income statement have :

Usefulness Limita ons

1) Evaluate the past performance of 1) Companies omit items from the
the company. income statement that they cannot
measure reliably.
2) Provide a basis for predic ng future 2) Income numbers are affected by
performance. the accoun ng methods employed.

3) Help assess the risk or uncertainty 3)Income measurement involves

of achieving future cash flows. judgment.
Q) The first statement to prepare at the end of the accoun ng period is ?

A) Cash Flow Statement

B) None of provided answers is the first statement to prepare

C) Changes in Equity Statement

D) The Statement of Financial Posi on

Q) Which of the following is a limita on of the income statement?

A) Evalua ng the past performance of the company

B) Providing a basis for predic ng future performance

C) Assessing the risk of achieving future cash flow

D) All of the above represent limita ons of the income statement

E) None of the above represents limita ons of the income statement

Q) One of the following is not a limita on of the income statement?

A) Income numbers are affected by the accoun ng methods employed

B) Income measurement involves judgment

C) Income statement provides basis for predic ng future performance

D) Companies omit items from the income statement that they cannot measure reliably

Q) One of the following is not Usefulness of the income statement?

A) Evaluate the past performance of the company

B) Income measurement involves judgment

C) Income statement provides basis for predic ng future performance

D) Help assess the risk or uncertainty of achieving future cash flows.

The parts of income statements
1) Revenue
2) Expenses
3) Gain
4) Losses
 Earnings per share (EPS) = net income - preference dividends / weighted average number of
ordinary shares