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

Flashcards covering key vocabulary and concepts from the lecture on income statements, comprehensive income, and cash flows.

Income Statement

Also known as Statement of Operations or Statement of Earnings, it reports a company's profit during a particular reporting period.

Comprehensive Income

Includes all types of gains and losses not reported in the Income Statement, combining net income with other comprehensive income.

Statement of Cash Flows

Provides information about cash receipts and cash payments.

Operating Expenses

Costs incurred in the normal course of business operations, including selling expense, general and administrative expense, research and development, and restructuring costs.

Discontinued Operations

Components of a business that have been sold, disposed of, or are held for sale, with significant impact on financial results.

Earnings per Share (EPS)

A measure of a company's profitability that is calculated as net income divided by the weighted-average number of common shares outstanding.

Other Comprehensive Income (OCI)

Includes net unrealized holding gains and losses on investments and other gains and losses not included in net income.

Accumulated Other Comprehensive Income (AOCI)

A cumulative total of other comprehensive income, reported as a component of shareholders' equity.

Gains and Losses

Financial results that can be operating or nonoperating, affecting income from continuing and discontinued operations.

Permanent Earnings

Earnings that are not likely to recur in the foreseeable future.

Temporary Earnings

Earnings that result from transactions likely to generate similar profits in the future.

Two Reporting Methods for Comprehensive Income

Single continuous statement of comprehensive income or two separate, consecutive statements.

Prospective Approach

An accounting change applied to current and future periods without adjusting prior periods.

Retrospective Approach

An accounting change applied by adjusting financial statements of prior periods as if the new principle had always been in effect.