After reading this chapter, you should be able to answer the following questions: What is revenue, and what are the two criteria that permit revenue recognition? How is cost of goods sold determined under both perpetual and periodic inventory accounting systems? What is the significance of gross profit, and how is gross profit calculated and used?. | CHAPTER 9 THE INCOME STATEMENT AND THE STATEMENT OF CASH FLOWS McGraw-Hill/Irwin ©The McGraw-Hill Companies, Inc., 2002 Learning Objectives What is revenue, and what are the two criteria that permit revenue recognition? How is cost of goods sold determined under both perpetual and periodic inventory accounting systems? What is the significance of gross profit, and how is gross profit calculated and used? What are the principal categories and components of “other operating expenses,” and how are these items reported on the income statement? McGraw-Hill/Irwin ©The McGraw-Hill Companies, Inc., 2002 Learning Objectives 5. What is included in “income from operations,” and why is this income statement subtotal significant to managers and financial analysts? 6. What are the components of the earnings per share calculation, and what are the reasons for some of the refinements made in that calculation? 7. What are the alternative income statement presentation models? McGraw-Hill/Irwin ©The McGraw-Hill Companies, Inc., 2002 Learning Objectives 8. What are the unusual items that may appear on the income statement? 9. What are the purpose and general format of the statement of cash flows? What is the difference between the direct and the indirect methods of presenting cash flows from operating activities? 11. Why is the statement of cash flows significant to financial analysts and investors who rely on the financial statements? McGraw-Hill/Irwin ©The McGraw-Hill Companies, Inc., 2002 Learning Objective 1 What is revenue, and what are the two criteria that permit revenue recognition? McGraw-Hill/Irwin ©The McGraw-Hill Companies, Inc., 2002 Income Statement Answers important questions such as: What are the financial results of operations of the entity for the fiscal year? Are sales increasing relative to cost of goods sold and other operating expenses? Reports what has happened over a period of time McGraw-Hill/Irwin ©The McGraw-Hill Companies, Inc., 2002 Revenues Inflows or . | CHAPTER 9 THE INCOME STATEMENT AND THE STATEMENT OF CASH FLOWS McGraw-Hill/Irwin ©The McGraw-Hill Companies, Inc., 2002 Learning Objectives What is revenue, and what are the two criteria that permit revenue recognition? How is cost of goods sold determined under both perpetual and periodic inventory accounting systems? What is the significance of gross profit, and how is gross profit calculated and used? What are the principal categories and components of “other operating expenses,” and how are these items reported on the income statement? McGraw-Hill/Irwin ©The McGraw-Hill Companies, Inc., 2002 Learning Objectives 5. What is included in “income from operations,” and why is this income statement subtotal significant to managers and financial analysts? 6. What are the components of the earnings per share calculation, and what are the reasons for some of the refinements made in that calculation? 7. What are the alternative income statement presentation models? McGraw-Hill/Irwin ©The .
