财务会计专业英语课件8.pptx

1、Week 9 Assignment for week 8Chapter 4Quiz next weekIncome StatementP74elements of financial statements1.Operating section (a)sales or revenue section (b)cost of goods sold section (c)selling expenses (d)administrative or general expenses2.non-operating section (a)other revenues and gains (b)other ex

2、penses and losses3.Income tax4.Discontinued operations5.Extraordinary items6.Cumulative effect of a change in accounting principle7.Earnings per shareIncome statement sections1Which of the following names is NOT associated with the income statement?1.P&L 2.Statement of Financial Position 3.Statement

3、 of Operations 4.Statement of earnings 2The income statement heading will specify which of the following?1.a POINT in time 2.a PERIOD of time 3Amounts earned by a company in its main operating activities are 1.revenues 2.gains 4A company disposes of equipment that it no longer uses in its business.T

4、he amount received by the company is more than the amount the asset is carried at in the accounting records.The company will report a(n)1.expense 2.gain 3.loss 4.revenue 5On December 1 a company borrowed$100,000 at 12%per year.The interest will be paid quarterly,with the first payment due on March 1

5、.What should the company report on its income statement for December?6 Is a retailers Interest Expense an operating expense or a non-operating expense?Why is interest expense a non-operating expense?7The combination of Selling Expenses and Administrative Expenses is referred to as 1.general expenses

6、 2.operating expenses 3.total expenses 8Net Sales minus the Cost of Goods Sold equals 1.gross profit 2.income from operations income 9Which basis of accounting best measures profitability during a short time interval?1.accrual basis 2.cash basis 10When an entire division of a company is eliminated,i

7、t is referred to as a(n)1.discontinued operation 2.extraordinary item 3.change in accounting principle The discontinued operations section is the first irregular item in a properly prepared income statement.This section indicates units or businesses a company sold,or discontinued,over the period und

8、er review.For example,a company with a 30 percent effective tax rate sells a profitable unit and reaps a$1 million gain through the deal.At the end of the year,the business would report net income from discontinued operations amounting to$700,000($1 million minus a transactional tax charge of$300,00

9、0,or$1 million times 30 percent).Discontinued Operations11A gain or loss that is unusual in nature and infrequent in occurrence is a(n)1.discontinued operation 2.extraordinary item 3.change in accounting principle In accounting terminology,an extraordinary item is an event that is both unusual in na

10、ture and infrequent in occurrence.Examples include snow in sub-Saharan Africa,political expropriations in a country with a long tradition of democracy and respect of private property,and an earthquake in a region that has not encountered geological misfortune in the last 300 years.Economic events th

11、at are unusual in nature or infrequent in occurrence do not qualify as extraordinary items and usually end up in the regular items section of an income statement.Extraordinary ItemsExtraordinary items are very rare.A recent issue of Accounting Trends&Techniques published by the AICPA showed that of

12、the 500 financial reports surveyed in 2009 there were only 3 extraordinary items reported.In 2008 there were 2 extraordinary items reported in the 500 financial reports surveyed.In 2007 and 2006 there were 4 extraordinary items presented in each of the years 600 financial reports.In other words,over

13、 the four-year period only 0.6%of the 2,200 financial reports surveyed had presented extraordinary items.12When a company changes its book depreciation from an accelerated method to the straight-line method,it is considered to be a(n)1.discontinued operation 2.extraordinary item 3.change in accounti

14、ng principle As irregular items,cumulative effects of accounting changes pertain to accounting adjustments a business makes to factor in financial reporting modifications in prior performance data.These adjustments do not call for any monetary transaction-meaning,the company does not pay for any exp

15、ense that results from these changes.For example,if a Mexico City-based organization changes its accounting principles from Mexican generally accepted accounting principles to American GAAP,the business would record the cumulative effects of such a change in its income statement.Cumulative Effects o

16、f Accounting Changes1.Discontinued Operations2.Extraordinary Itemsfurther reading for chapter 413If a companys stock is publicly traded,is it a requirement that the earnings per share appear on the income statement?1.Yes 2.No 14Are the notes to the financial statements considered to be an integral p

17、art of the financial statements?1.Yes 2.No 15Is it acceptable that some of the expenses reported on the income statement be estimates?1.Yes 2.No CappuMania Pty Ltdfor the year ended 31 March 1998$Retained profits,beginning of year 4 400Add net profit for the year 14 810 19 210Deduct dividend declare

18、d during the year 1 000Retained profits,end of year 18 210Statement of retained profits1.Is a loans principal payment included on the income statement?2.If we dispose of an asset,will there be a change in the owners equity?Oral practice Recognition of revenue or expense at the same time as cash infl

19、ow or outflow1.A retail shop records a cash sale to a customer.2.An investor records a dividend cheque received form BHP.3.A company pays Acme Rug Cleaners to shampoo the carpets inits customer waiting area.4.A company makes a donation to the accounting department of the local university to support

20、teaching and research.practice IRecognition of revenue or expense prior to cash flow 1.A lawyer performs services for a client in June,and bills the client$500 to be paid within thirty days.2.A company receives a$2400 advertising bill on 10 June payable in thirty days.3.A manufacturer estimates that

21、 it will incur future warranty costs of$3000 in the 2008 financial year on products sold during the 2007 financial year.4.On 30 June 2014 a company calculates that its 2014 income taxes are$xxx.the company must pay the taxes by 15 March 2015.The lawyer receives full payment from her client in July.T

22、he advertising expense is paid on 10 July.practice IICash collections or payments related to previously recognised revenues and expenses1.The lawyer receives full payment from her client in July.2.The advertising expense is paid on 10 July.3.The manufacturer makes payments under the warranty during

23、the 2008 financial year.4.The company mails it scheque to the Australian Taxation Office on 10 March 2015.practice IIICash flow prior to revenue and expense recognition1.A lawyer receives an advance of$2500 from a client for future services.2.In June 2007,Dogwood Limited pays$400 for a one-year fire

24、 insurance policy that becomes effective 1 July 2007.3.In July 2007,Gogwood Limited purchases,for$40,000 in cash,a new building to be used as a retail location.Dogwood estimates that the building will be useful for ten years.4.Dogwood Limited purchases$5000 worth of stereo components from a supplier

25、 for cash.Dogwood intends to resell these items to its customers.practice IVRecognition of revenue or expense subsequent to cash flow 1.The lawyer completes the work promised for the client.2.The fire insurance policy expires in June 2008.3.Dogwood recognises a portion of the cost of the building as

26、 an operating expense.4.Dogwood sells all of the stereo components to customers.practice VExpiration of assetsExample A1.On 1 June a company pays$24,000 for a one-year insurance policy.2.At 30 June on-twelfth of the asset would be used up.Example B1.On 3 June a company purchases supplies costing$10,

27、000 which they pay cash for.2.At 30 June it is ascertained that$3000 of the supplies remains unused.practice VIUnearned revenues1.At the start of the year the company receives subscriptions of$240,000 and has romised to send out magazines for twelve months.2.Each month the magazine is sent out.pract

28、ice VIIAccrual of unrecorded expenses1.Wages are paid weekly on Thursday to cover the previous five working days prior to the Thursday.If 30 June falls on a Friday,two days wages will be owing at 30 June.If the weekly wages bill is$500 000,then$200 000 will be owing.practice VIIIAccrual of unrecorded revenues1.Assume a company put$300 000 with a bank for one year at 10%on 1 March 2007(interest payable at the end of the period).At 30 June 2007 they would have earned$10 000 interest,even though the total interest of$30,000 would not be received until 28 February 2008.practice IX