Chapter 4 - The Income Statement, Comprehensive Income, and the Statement of Cash Flows

These flashcards cover key concepts from Chapter 4 regarding the Income Statement, Comprehensive Income, and Cash Flows.

What does the Income Statement report?

A company's profit during a particular reporting period.

What components are included in Comprehensive Income?

Net income and Other comprehensive income.

What is the primary purpose of the Statement of Cash Flows?

To provide information about cash receipts and cash payments of an enterprise.

What are the three basic types of income statements?

Multiple Step Income Statement without Discontinued Operations, Multiple Step Income Statement with Discontinued Operations, and Statement of Comprehensive Income.

What distinguishes the Multiple Step Income Statement from the Single-Step Income Statement?

The Multiple Step Income Statement separates operating and non-operating income, providing intermediate subtotals.

What is included in Income from Continuing Operations?

It reports revenues and expenses that have occurred during the reporting period.

What is the definition of Other Comprehensive Income?

Gains and losses from non-owner transactions that are not reported in the Income Statement.

What does the formula for Comprehensive Income consist of?

Comprehensive Income = Net Income + Other Comprehensive Income.

What is the purpose of the Cash Flow from Operating Activities?

To track cash inflows and outflows related to primary business operations.

What activities are included in Financing Activities on the Cash Flow Statement?

Cash transactions with owners or creditors regarding the company's capital.

How are Activity Ratios used in profitability analysis?

They measure how effectively a company uses its assets to generate sales.

What is the formula for the Profit Margin on Sales?

Profit Margin = Net Income / Net Sales.

What does the DuPont Framework help analyze?

It breaks down Return on Equity into profitability, activity, and financial leverage.