R. G. QUINTERO & CO. CFA LEVEL I Q-NOTES STUDY SESSION 8 (EXCERPT) FINANCIAL STATEMENT ANALYSIS: UNDERSTANDING THE UNDERSTANDING THE FINANCIAL STATEMENTS.

Slides:

Advertisements

Similar presentations

William F. Bentz 1 A&MIS 521 Fin. Accounting I - Session 16 William F. Bentz Accounting & MIS.

Advertisements

Chapter 18 REVENUE RECOGNITION CONTINUED Sommers – ACCT 3311

FASB definitions Allocation: is the accounting process of assigning or distributing an amount according to a plan or a formula. It is a broader term than.

©The McGraw-Hill Companies, Inc. 2006McGraw-Hill/Irwin Chapter Five Accounting for Merchandising Businesses.

Acct 2210: Chp 4 (Omit pg 227 & the Appendix) Accounting for Merchandising Businesses McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies,

Chapter Six Revenue Recognition. Copyright © Houghton Mifflin Company.All rights reserved What are Revenues? Inflows or other enhancements of the.

McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-1 McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc., All Rights.

The Accrual Concept. What is it? Definitions  Economic income  Distributable earnings  Permanent earnings  Accounting income.

Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter Five Income Measurement and Profitability Analysis.

Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Income Measurement and Profitability Analysis 5.

Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Operating Decisions and the Income Statement Chapter 3.

1 Revenue Recognition An electronic presentation by Douglas Cloud by Douglas Cloud Pepperdine University Pepperdine University An electronic presentation.

Income Measurement (Part 2)

Chapter 3 Operating Decisions and the Income Statement 9/07/04.

COPYRIGHT © 2007 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.

Week 5 Revenue Recognition and Receivables. Revenue Recognition Revenue recognition refers to the recording of revenue by a company GAAP has two revenue.

1 Income Measurement and Profitability Analysis Sid Glandon, DBA, CPA Associate Professor of Accounting.

BAD DEBTS Chapter 8 p Bad Debts = a term used to describe amounts that cannot be collected The reporting of bad debts is governed by the matching.

Measuring Business Income 3. Profitability Measurement: Issues and Ethics OBJECTIVE 1: Define net income, and explain the assumptions underlying income.

Measuring Business Income 3. Profitability Measurement: Issues and Ethics OBJECTIVE 1: Define net income, and explain the assumptions underlying income.

Chapter 19: Revenue Recognition 上海金融学院会计学院. 1.Apply the revenue recognition principle. 2.Describe accounting issues involved with revenue recognition.

Intermediate Accounting

Long-Term Contracts (Construction)

AS 9 : Revenue Recognition.  Revenue is the gross inflow of cash, receivables or other consideration arising in the course of the ordinary activities.

INCOME MEASUREMENT AND PROFITABLITY ANALYSIS Chapter 5 © 2009 The McGraw-Hill Companies, Inc.

Financial Statements Q&A. Name a type of Financial Statement?

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 7-1 Preparing an Income Statement Component Percentages.

Preparing an Income Statement LESSON 7-1.  An income statement reports financial information over a specific period of time, indicating the financial.

18-1 Prepared by Coby Harmon University of California, Santa Barbara Intermediate Accounting.

Income Measurement (Part 1)

Chapter 3 Operating Decisions and the Income Statement.

Operating Decisions and the Income Statement Chapter 3 McGraw-Hill/Irwin © 2009 The McGraw-Hill Companies, Inc.

Needles Powers Crosson Principles of Accounting 12e Adjusting the Accounts 3 C H A P T E R © human/iStockphoto.

Chapter : Measurement and Reporting of Revenues and Expenses, Gains and Losses.

IAS 11 - Construction Contracts. Academic Resource Center Revenue recognition including construction contracts Page 2 Recognition before delivery – construction.

UNDERSTANDING INCOME STATEMENTS 1Đặng Thị Thu Hằng.

Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Operating Decisions and the Income Statement Chapter 3.

© 2004 The McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Chapter 5 Income Measurement and Profitability Analysis.

Operating Decisions and the Income Statement Chapter 3 McGraw-Hill/Irwin © 2009 The McGraw-Hill Companies, Inc.

Income Statement (“P&L”) Cash Flow Statement Balance Sheet An Introduction to Financial Statements.

Basic accounting Concepts: The Income Statement Income Statement Income statement (profit and loss statement, statement of earnings, statement of operations)

Chapter 18-1 Revenue Recognition Chapter18 Intermediate Accounting 12th Edition Kieso, Weygandt, and Warfield.

Chapter Four Accounting for Merchandising Businesses McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter Four Accounting for Merchandising Businesses McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Financial Accounting Chapter 3

© 2000 South-Western Educational Publishing INCOME STATEMENT INFORMATION ON A WORK SHEET Lesson 8-1, page 182.

What are the major financial statements needed in a business plan?

Extending Financial Statement Information on a Work Sheet

Chapter 8 – Financial Statements for a Proprietorship

Accounting for Construction Contracts (IAS 11)

EXTENDING BALANCE SHEET ACCOUNT BALANCES ON A WORK SHEET

Financial Accounting Chapter 3

REVENUE AND EXPENSE RECOGNITION

FINANCIAL ACCOUNTING A USER PERSPECTIVE

HIGHLIGHTS OF CHAPTER 5: Income Measurement & Profitability Analysis

© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

INCOME STATEMENT INFORMATION ON A WORK SHEET

Income Measurement and Profitability Analysis

LESSON 7-1 Preparing an Income Statement

Extending Financial Statement Information on a Work Sheet

LESSON 6-3 Extending Financial Statement Information on a Work Sheet

LESSON 7-1 Preparing an Income Statement

Point 6 Financial Statements

Extending Financial Statement Information on a Work Sheet

LESSON 7-1 Preparing an Income Statement

Extending Financial Statement Information on a Work Sheet

Extending Financial Statement Information on a Work Sheet

LESSON 7-1 Preparing an Income Statement

Principal Balance January 1

Presentation transcript:

R. G. QUINTERO & CO. CFA LEVEL I Q-NOTES STUDY SESSION 8 (EXCERPT) FINANCIAL STATEMENT ANALYSIS: UNDERSTANDING THE UNDERSTANDING THE FINANCIAL STATEMENTS

Level I - Session 8 ©R. G. Quintero & Co. 2 SESSION 8 OVERVIEW  Understanding the Income Statement  Understanding the Balance Sheet  Understanding the Cash Flow Statement

UNDERSTANDING THE INCOME STATEMENT by Thomas R. Robinson, Hennie van Greuning, Elaine Henry, and Michael A. Broihahn ©R. G. Quintero & Co. 3Level I - Session 8

©R. G. Quintero & Co. 4

WHEN TO RECOGNIZE REVENUES*  Evidence of arrangement between buyer and seller  Product has been delivered or services rendered  Price has been determined or is determinable  Seller has reasonable assurance of payment *SAB 101 Level I - Session 8 ©R. G. Quintero & Co. 5

SPECIAL SITUATIONS AFFECTING REVENUE RECOGNITION  Long-term contracts  Pct. of completion vs. completed contract A/C  Installment sales  Barter T/A’s  Gross and net reporting Level I - Session 8 ©R. G. Quintero & Co. 6

Level I - Session 8 ©R. G. Quintero & Co. 7 PERCENTAGE OF COMPLETION vs. COMPLETED CONTRACT ACCOUNTING Percentage of CompletionCompleted Contract Applicability LT contracts extending over > 1 A/C period Costs subject to estimation Costs may or may not be subject to estimation Revenue recognition Costs incurred as % of total Job progress estimates as % of total job At end of project Expense recognition % of total costs x % of total revenues recognized At end of project Earnings recognition Throughout term of project At end of project Loss recognition Entire is amount as soon as it is subject to estimation Cash flowIdentical under both methods

Level I - Session 8 ©R. G. Quintero & Co. 8

Level I - Session 8 ©R. G. Quintero & Co. 9

Level I - Session 8 ©R. G. Quintero & Co. 10 PERCENTAGE OF COMPLETION vs. COMPLETED CONTRACT  Income statement and balance sheet differ during project; identical at end  Cash flows are identical  Pct of completion can result in errors or manipulation  Completed contract can cause  Sales and earnings volatility  Erroneous view of earnings during period

Level I - Session 8 ©R. G. Quintero & Co Rudlen Company had an $80 million contract with a 20% gross margin that was completed during the 4 th quarter of It incurred costs of $10 million on the contract during that quarter. Its 4 th quarter revenues under percentage of completion and completed contract accounting would be reported as: a.$10 million and $16 million, respectively. b.$12 million and $80 million, respectively. c.$12.5 million and $80 million, respectively. d.$16 million and $80 million, respectively.

Excludes pages 12 – 119 for Study Session 8 Level I - Session 8 ©R. G. Quintero & Co. 12