1
Q
Operating
A
financial firm: investing income, financing expenses
2
Q
Non-operating
A
Non-financial: Investing income, financing expenses
Investing income: Dividends and interest from investment in other firms.
Investment income and G,L from sale of securities = non-op for a non-financial firm.
Interest expense is based on the firms capital structure which is independent of the firms operations.
3
Q
Gen. op and non-op note:
A
They’re reported separately
L1 25 Understanding Income Statements
flashcards
Decks in class (10)
# Cards
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A describe the components of the income statement and alternative presentation formats of that statement;13
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B describe general principles of revenue recognition and accrual accounting, specific revenue recognition applications (including accounting for long-term contracts, installment sales, barter transactions, gross and net reporting of revenue), and implications of revenue recognition principles for fi20
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D describe general principles of expense recognition, specific expense recognition applications, and implications of expense recognition choices for financial analysis;8
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E describe the financial reporting treatment and analysis of non-recurring items (including discontinued operations, extraordinary items, unusual or infrequent items) and changes in accounting standards;9
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F distinguish between the operating and non-operating components of the income statement;3
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G,H describe how earnings per share is calculated and calculate and interpret a company’s earnings per share (both basic and diluted earnings per share) for both simple and complex capital structures; distinguish between dilutive and antidilutive securities, and describe the implications of each for23
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I convert income statements to common-size income statements;5
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K,L describe, calculate, and interpret comprehensive income; describe other comprehensive income, and identify major types of items included in it.8
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J evaluate a company’s financial performance using common-size income statements and financial ratios based on the income statement;4
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c calculate revenue given information that might influence the choice of revenue recognition method;0
