📅 Tuesday, April 30th, 2024

A poem begins in delight and ends in wisdom.

— Robert Frost

MGT011A Lecture:

  • single-step income statement: simple, net income = sum of revenues - sum of expenses
  • multi-step income statement
    • categorizes different revenues and expenses
    • like classified balance sheet, provides more information for investors
    • sections
      • operating section (operation only)
      • non-operating section (financing, investing)
    • service company
      • service revenue - total operating expenses = income from operations
      • income from operations +/- other income and expenses, net. = pretax income
    • merchandising company
      • net sales - cost of goods sold = gross profit
      • gross profit - total operating expenses = income from operations
      • income from operations +- other income and expenses, net. = pretax income
  • measures of company performance
    • gross profit on sales
    • income from operations
    • income before income taxes
    • net income
  • impact of missing adjusting journal entries
    • consider
      • What accounts would the adjusting entry affect if journaled?
      • Now, without the adjusting entry, would each account be overstated or understated?