The Income Statement, Comprehensive Income, and the Statement of Cash Flows

A collection of flashcards covering key terms and concepts from the lecture notes on income statements, comprehensive income, and cash flow statements.

Income Statement

A financial report that shows a company's revenues and expenses over a specific period, culminating in net income or loss.

Comprehensive Income

Total change in equity for a reporting period excluding transactions with owners, consisting of net income and other comprehensive income. \text{Comprehensive Income} = \text{Net Income} + \text{Other Comprehensive Income}

Net Income

Total profit of a company after all expenses, taxes, and costs have been deducted from total revenue. \text{Net Income} = \text{Total Revenue} - \text{Total Expenses}

Operating Income

Income generated from regular business operations, calculated by subtracting operating expenses from gross profit. \text{Operating Income} = \text{Gross Profit} - \text{Operating Expenses}

Earnings per Share (EPS)

A measure of a company's profitability on a per-share basis, calculated by dividing net income by the number of outstanding shares. \text{EPS} = \frac{\text{Net Income} - \text{Preferred Dividends}}{\text{Weighted Average Outstanding Shares}}

Recognition of Expenses

The accounting principle that expenses are reported in the same period as the revenues they help to generate.

Operating Activities

The cash flows that arise from the core business operations of a company, including cash receipts from selling goods and cash payments for operating expenses.

Investing Activities

Cash flows that relate to the acquisition and disposal of long-term assets, such as property, equipment, and investments.

Financing Activities

Cash flows that result from transactions with the company's owners and creditors, such as issuing stocks or borrowing funds.

Single-Step Income Statement

An income statement format where all revenues are listed first followed by all expenses in a single step.

Multiple-Step Income Statement

An income statement format that separates operating revenues and expenses from non-operating activities and presents intermediate subtotals.

Discontinued Operations

The component of a business that has been sold or is held for sale, the income or loss from which is reported separately in the financial statements.

International Financial Reporting Standards (IFRS)

A set of global accounting standards that dictate how various types of transactions and events should be reported in financial statements.

Accounting Changes

Changes in accounting principles, estimates, or entity reporting that can affect financial statements.

Other Comprehensive Income (OCI)

Revenues, expenses, gains, and losses that are excluded from net income on the income statement and reported separately.

Cash Flow Statement

A financial statement that provides data regarding the inflows and outflows of cash within a company over a specific period.

Income Smoothing

A technique used to stabilize income over multiple reporting periods by altering estimates and assumptions.

Classification Shifting

The practice of shifting expenses from operating to non-operating categories in order to present a more favorable operating income.

Loss from Discontinued Operations

The loss associated with a component of a business that has been disposed of or classified as held for sale, reported separately from continuing operations.

Partial Income Statement

A financial statement that includes only part of the typical income statement format, often focusing on key areas like revenues and expenses.

Accumulated Other Comprehensive Income (AOCI)

An equity account that aggregates all other comprehensive income items that have not been realized into shareholders' equity.