MAC-1 Lecture 2 - Income Statement
-
Upload
karthikeyan-nb -
Category
Documents
-
view
216 -
download
0
Transcript of MAC-1 Lecture 2 - Income Statement
-
8/11/2019 MAC-1 Lecture 2 - Income Statement
1/15
C. A. Akila Kalyanaraman
-
8/11/2019 MAC-1 Lecture 2 - Income Statement
2/15
SOURCE : http://www.hul.co.in/investorrelations/AnnualReports/AnnualReport2012-13/Downloadcentre.aspx
http://www.hul.co.in/investorrelations/AnnualReports/AnnualReport2012-13/Downloadcentre.aspxhttp://www.hul.co.in/investorrelations/AnnualReports/AnnualReport2012-13/Downloadcentre.aspxhttp://www.hul.co.in/investorrelations/AnnualReports/AnnualReport2012-13/Downloadcentre.aspxhttp://www.hul.co.in/investorrelations/AnnualReports/AnnualReport2012-13/Downloadcentre.aspx -
8/11/2019 MAC-1 Lecture 2 - Income Statement
3/15
Cash at
Bank
Purchase of
raw
materials
Conversion
into
finished
goods
Inventory of
WIP,
finished
goods
Sale to
customers
on account
Collection
of debtor
money
THE
OPERATINGCYCLE
SOURCE: http://www.businessbankertwincities.com/2011/12/small-business-loan-application.html
http://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.html -
8/11/2019 MAC-1 Lecture 2 - Income Statement
4/15
Income Statement summarizes the Revenues andExpenses of an entity for an accounting period
Revenue: is the value of earnings resulting from the
operations of the entity during the current period.
Expense: is the cost of resources used during currentperiod for the operations of the entity.
Revenue minus Expense = Income
Income increases Owners Equity.
-
8/11/2019 MAC-1 Lecture 2 - Income Statement
5/15
Accounting Period Concept : Accountingmeasures activities for a specified INTERVALof time called Accounting period
Year - Annual Report
Quarter (Q1,Q2,Q3,Q4) - Interim Report
Eg: Income Statement for the year endedMarch 31st,2013.
-
8/11/2019 MAC-1 Lecture 2 - Income Statement
6/15
Conservatism Concept : explains WHENRevenueor Expense has to be recorded.
ANTICIPATE NO PROFITS
but,ANTICIPATE ALL LOSSES
Revenues are recognized only when they are reasonablycertain, whereas expenses are recognized as soon as they
are reasonably possible.
Eg: Sales Revenue, Accrued Interest
-
8/11/2019 MAC-1 Lecture 2 - Income Statement
7/15
Realization Concept : Indicates HOW MUCHtobe recognized as Revenue.
Eg: The amount of Sales Revenue will bewhat the customers are reasonably willing topay.
If sold at Discount on MRP, then
Sale Value = Discounted Price
-
8/11/2019 MAC-1 Lecture 2 - Income Statement
8/15
Matching Concept : When a given
event affects both Revenues and
Expenses, the effect on each
should be recorded in the same
accounting period.
-
8/11/2019 MAC-1 Lecture 2 - Income Statement
9/15
Expenditureis the cost incurred inacquiring goods or services to be usedas Asset or for Usage during theperiod, whether paid or unpaid.
Eg: Expenditure on purchase of
Office Computer - Asset
Paper for office use - Expense
-
8/11/2019 MAC-1 Lecture 2 - Income Statement
10/15
Expenditure
When
Current
PeriodExpense
Future Asset
What
Asset
Usage Expense
-
8/11/2019 MAC-1 Lecture 2 - Income Statement
11/15
Expenditure
incurred
during time
T
T
T
Payment
made
during time
T
T
T+1
Pertaining
to time
T
T+1
T
Recorded
as
Expense in
T
Asset in T
and
expense in
T+1
Liability in
T and
expense in
T
Example
Period
costs
Prepaid
Insurance
Unpaid
wages for
last month.
-
8/11/2019 MAC-1 Lecture 2 - Income Statement
12/15
Consistency Concept : Entity requiredto follow consistent accountingpractices.
eg: Inventory Valuation
Materiality Concept : Insignificant
events may be disregarded, but fulldisclosure of all importantinformation.
-
8/11/2019 MAC-1 Lecture 2 - Income Statement
13/15SOURCE : http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/
http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/ -
8/11/2019 MAC-1 Lecture 2 - Income Statement
14/15
Anthony, Hawkins, & Merchant (AHM) Chapter3
http://www.hul.co.in/investorrelations/AnnualReports/AnnualReport2012-13/Downloadcentre.aspx
http://www.businessbankertwincities.com/2011/12/small-business-loan-application.html
http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/
http://www.hul.co.in/investorrelations/AnnualReports/AnnualReport2012-13/Downloadcentre.aspxhttp://www.hul.co.in/investorrelations/AnnualReports/AnnualReport2012-13/Downloadcentre.aspxhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.hul.co.in/investorrelations/AnnualReports/AnnualReport2012-13/Downloadcentre.aspxhttp://www.hul.co.in/investorrelations/AnnualReports/AnnualReport2012-13/Downloadcentre.aspxhttp://www.hul.co.in/investorrelations/AnnualReports/AnnualReport2012-13/Downloadcentre.aspxhttp://www.hul.co.in/investorrelations/AnnualReports/AnnualReport2012-13/Downloadcentre.aspx -
8/11/2019 MAC-1 Lecture 2 - Income Statement
15/15
Thank You