Professional Documents
Culture Documents
تحليل 2
تحليل 2
Income Statement
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
The Income Statement
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 4, Slide #3
Basic Elements of the Income Statement
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 4, Slide #4
Chapter 4, Slide #5
Net Sales
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 4, Slide #6
Cost of Goods Sold
Retailer Manufacturer
Beginning Inventory Beginning Inventory
+ Purchases + Cost of Goods
– Ending Inventory Manufactured
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 4, Slide #7
Other Operating Revenue
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 4, Slide #8
Operating Expenses
• Selling expenses
– Result from the company’s effort to create sales
– Examples
• Advertising
• Sales commissions
• Sales supplies used
• Administrative expenses
– Relate to the general administration of the
company’s operation
– Examples
• Salaries
• Insurance
• Bad debt expense
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 4, Slide #9
Other Income or Expense
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 4, Slide #10
Special Income Statement Items
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 4, Slide #11
Special Income Statement Items (cont’d)
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 4, Slide #12
Special Income Statement Items (cont’d)
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 4, Slide #13
Special Income Statement Items (cont’d)
• Extraordinary Items
– Unusual and infrequent
– Reported net of income tax
– Analysis issues:
• Exclude from primary analysis
• Include for supplementary analysis
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 4, Slide #14
Special Income Statement Items (cont’d)
• Cumulative Effect of a Change in Accounting
Principle
– For fiscal years beginning before 12/15/05
• Cumulative effect of the change shown net of tax on the
income statement of the period in which change was
made
• Earlier statements not restated to reflect application of the
new principle
– Effective for fiscal years beginning after 12/15/05
• All comparative statements are retrospectively restated to
reflect application of the new accounting principle
• The cumulative effect on income of earlier years is shown
as a net-of-tax adjustment to the beginning Retained
Earnings balance of the earliest period presented
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 4, Slide #15
Special Income Statement Items (cont’d)
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 4, Slide #16
Reconciliation of Retained Earnings
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duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 4, Slide #18
Stock Dividends
• Cash dividends
– Date of declaration: create liability and reduce
retained earnings
– Date of payment: reduce liability and cash
• Stock dividends
– Small (less then 25%): capitalize the market value
of the stock
– Material: capitalize the par value of the stock
– Total equity is unaffected by a stock dividend
– Analysis issues:
• Restate share quantities to reflect stock dividend activity
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 4, Slide #19
Stock Dividend Example
• 2-for-1 split
– Doubles the quantity of stock
– Par or stated value is halved
• No effect on retained earnings, additional paid-
in capital, or capital stock accounts
• Analysis issues:
– Restate share quantities to reflect split activity
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 4, Slide #21
Legality of Distributions to Shareholders
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duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 4, Slide #22
Comprehensive Income
Net income
+ The period’s change in accumulated other comprehensive income
= Comprehensive income
• Required disclosures
– Comprehensive income
– Other comprehensive income from each category
– Reclassification adjustments for each category of
other comprehensive income
– Tax effects for each category of other
comprehensive income
– Balances for each category of other comprehensive
income
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 4, Slide #24
Comprehensive Income –
Combined with Income Statement
XYZ Corporation
Statement of Income and Comprehensive Income
For the Year Ended December 31, 20XX
Sales $ 230,000
Cost of goods sold 140,000
Gross profit 90,000
Operating expenses 40,000
Operating income 50,000
Other income 4,000
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 4, Slide #26
Comprehensive Income (cont’d)
• Presentation
– In a separate financial statement
– Combined with the income statement
– As part of the schedule of changes in stockholders’
equity
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 4, Slide #27
Comprehensive Income – As Part of the
Statement of Stockholders’ Equity
XYZ Corporation
Statement of Changes in Stockholders' Equity
For the Year Ended December 31, 20XX
Accumulated
Other
Retained Comprehensive Common Stock
Total Earnings Income Amount Shares
Beginning Balance $180,000 $60,000 $10,000 $110,000 55,000
Net Income 34,000 34,000
Available-for-sale
security adjustment,
net of tax 5,500 5,500
Minimum pension
liability adjustment, net
of tax 3,500 3,500
Foreign currency
transaction adjustment,
net of tax (5,000) (5,000)
Comprehensive income 38,000
Ending Balance $218,000 $94,000 $14,000 $110,000 55,000
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 4, Slide #28
Comprehensive Income (cont’d)
• Analysis issues:
– Typically more volatile than net income
– A better indication of long-run profitability
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 4, Slide #29
Income Statement IFRS vs GAAP
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duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 4, Slide #30