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income statement (or) statement of earnings (or) statement of operations
This financial statement reports a company’s revenues, expenses, gains, losses for the period indicated in its heading. This is sometimes referred to as the P&L.
income statement (or) statement of earnings (or) statement of operations
This financial statement reports a company’s revenues, expenses, gains, losses for the period indicated in its heading. This is sometimes referred to as the P&L.
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expenses
Under the accrual method of accounting, a company reports these when they are incurred in producing revenues or when they have been used up.
expenses
Under the accrual method of accounting, a company reports these when they are incurred in producing revenues or when they have been used up.
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operating revenues
These revenues refer to amounts earned by a company from its main products or services.
operating revenues
These revenues refer to amounts earned by a company from its main products or services.
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sales
This term refers to the revenues earned by selling a product.
sales
This term refers to the revenues earned by selling a product.
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operating expenses
These expenses are associated with a company’s main activities and include a retailer’s costs of goods sold and its selling, general and administrative (SG&A) expenses.
operating expenses
These expenses are associated with a company’s main activities and include a retailer’s costs of goods sold and its selling, general and administrative (SG&A) expenses.
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nonoperating revenues
These revenues come from outside of a company’s main activities. An example is the interest earned by a clothing store.
nonoperating revenues
These revenues come from outside of a company’s main activities. An example is the interest earned by a clothing store.
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gains
These are positive income statement amounts that are not revenues. One of these occurs when plant assets are sold for more than their book value.
gains
These are positive income statement amounts that are not revenues. One of these occurs when plant assets are sold for more than their book value.
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nonoperating expenses
Expenses that are outside of a company’s main activities such as the interest expense incurred by a retail store.
nonoperating expenses
Expenses that are outside of a company’s main activities such as the interest expense incurred by a retail store.
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losses
These are negative income statement amounts that are not expenses. One of these occurs when plant assets are sold for less than their book value.
losses
These are negative income statement amounts that are not expenses. One of these occurs when plant assets are sold for less than their book value.
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comparative income statement
This type of income statement has two or more columns of amounts so the reader can relate the most recent amounts to amounts in an earlier accounting period.
comparative income statement
This type of income statement has two or more columns of amounts so the reader can relate the most recent amounts to amounts in an earlier accounting period.
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interim income statements
These income statements are issued for periods other than the official annual income statements. An example is the quarterly income statements.
interim income statements
These income statements are issued for periods other than the official annual income statements. An example is the quarterly income statements.
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earnings per share (or) EPS
A corporation’s net income (after the preferred dividend requirement) divided by the weighted average number of shares of common stock outstanding.
earnings per share (or) EPS
A corporation’s net income (after the preferred dividend requirement) divided by the weighted average number of shares of common stock outstanding.
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multiple step
This income statement format when used by a retailer will report amounts in the following order: sales, cost of goods sold, gross profit, operating expenses, operating income, nonoperating revenues and nonoperating expenses, net income.
multiple step
This income statement format when used by a retailer will report amounts in the following order: sales, cost of goods sold, gross profit, operating expenses, operating income, nonoperating revenues and nonoperating expenses, net income.
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single step
This income statement format has one subtraction: operating and nonoperating revenues and gains minus operating and nonoperating expenses and losses = net income.
single step
This income statement format has one subtraction: operating and nonoperating revenues and gains minus operating and nonoperating expenses and losses = net income.
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gross profit (or) gross margin
This is defined as net sales minus cost of goods sold.
gross profit (or) gross margin
This is defined as net sales minus cost of goods sold.
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operating income (or) income from operations
This is the amount before nonoperating revenues and nonoperating expenses. In a multiple-step income statement it is the remainder after subtracting operating expenses (SG&A) from gross profit.
operating income (or) income from operations
This is the amount before nonoperating revenues and nonoperating expenses. In a multiple-step income statement it is the remainder after subtracting operating expenses (SG&A) from gross profit.
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accrual method of accounting (or) accrual basis of accounting
This method is required by large corporations and it reports revenues when they are earned, and expenses when they occur.
accrual method of accounting (or) accrual basis of accounting
This method is required by large corporations and it reports revenues when they are earned, and expenses when they occur.
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SG&A (or) selling, general and administrative
These are a company’s operating expenses other than the cost of goods sold. They are period expenses as opposed to product costs.
SG&A (or) selling, general and administrative
These are a company’s operating expenses other than the cost of goods sold. They are period expenses as opposed to product costs.
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comprehensive income
This includes a company’s net income reported on its income statement plus other comprehensive income (income or losses from currency translation, hedging, pensions, etc.)
comprehensive income
This includes a company’s net income reported on its income statement plus other comprehensive income (income or losses from currency translation, hedging, pensions, etc.)
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other comprehensive income
This refers to the income associated with currency translation, hedging, pensions, etc. This category of income is not included in the net income that is reported on the income statement.
other comprehensive income
This refers to the income associated with currency translation, hedging, pensions, etc. This category of income is not included in the net income that is reported on the income statement.
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publicly-traded
This term is used when referring to a corporation’s common stock that is traded on a major stock exchange.
publicly-traded
This term is used when referring to a corporation’s common stock that is traded on a major stock exchange.
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extraordinary item
Prior to 2016, the term was used on the income statement to report items that were both 1) unusual in nature, and 2) infrequent in occurrence. (This term and classification are no longer used.)
extraordinary item
Prior to 2016, the term was used on the income statement to report items that were both 1) unusual in nature, and 2) infrequent in occurrence. (This term and classification are no longer used.)
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calendar year
This term refers to an accounting period of January 1 through December 31.
calendar year
This term refers to an accounting period of January 1 through December 31.
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fiscal year
This term refers to an accounting year that does not end on December 31.
fiscal year
This term refers to an accounting year that does not end on December 31.
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matching principle
This basic accounting principle requires companies to accrue some expenses and to defer some expenses.
matching principle
This basic accounting principle requires companies to accrue some expenses and to defer some expenses.
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cost of goods sold (or) cost of sales
This is likely to be the largest operating expense on the income statement of a retailer or manufacturer. It requires that a cost flow such as FIFO or LIFO be used.
cost of goods sold (or) cost of sales
This is likely to be the largest operating expense on the income statement of a retailer or manufacturer. It requires that a cost flow such as FIFO or LIFO be used.
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period of time (or) time interval
This is indicated by the date in the heading of an income statement.
period of time (or) time interval
This is indicated by the date in the heading of an income statement.
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GAAP (or) generally accepted accounting principles (or) US GAAP
The term or acronym for the common accounting rules and standards followed in the U.S. They are developed by the Financial Accounting Standards Board.
GAAP (or) generally accepted accounting principles (or) US GAAP
The term or acronym for the common accounting rules and standards followed in the U.S. They are developed by the Financial Accounting Standards Board.
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FASB (or) Financial Accounting Standards Board
This is the non-government organization that develops the accounting standards in the U.S.
FASB (or) Financial Accounting Standards Board
This is the non-government organization that develops the accounting standards in the U.S.
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SEC (or) Securities and Exchange Commission
This U.S. government agency has regulatory power over the U.S. stock exchanges and the reporting requirements of the corporations with stock trading on those stock exchanges.
SEC (or) Securities and Exchange Commission
This U.S. government agency has regulatory power over the U.S. stock exchanges and the reporting requirements of the corporations with stock trading on those stock exchanges.
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materiality
This concept allows large companies to round amounts on their financial statements and to immediately expense inexpensive equipment.
materiality
This concept allows large companies to round amounts on their financial statements and to immediately expense inexpensive equipment.
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depreciation expense
This is the systematic allocation of a plant asset’s cost to expense over the useful life of the asset. This is necessary because of the matching principle.
depreciation expense
This is the systematic allocation of a plant asset’s cost to expense over the useful life of the asset. This is necessary because of the matching principle.
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common-size income statement
This type of income statement restates each amount to be a percentage of net sales or net revenues.
common-size income statement
This type of income statement restates each amount to be a percentage of net sales or net revenues.
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notes to the financial statements (or) footnotes
These are required with external financial statements in order to comply with the full disclosure principle. The company’s significant accounting policies are one of the disclosures.
notes to the financial statements (or) footnotes
These are required with external financial statements in order to comply with the full disclosure principle. The company’s significant accounting policies are one of the disclosures.
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LIFO (or) last in, first out
This cost flow assumption removes from inventory the most recent costs first and charges them to the cost of goods sold. As a result, the older costs remain in inventory.
LIFO (or) last in, first out
This cost flow assumption removes from inventory the most recent costs first and charges them to the cost of goods sold. As a result, the older costs remain in inventory.
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FIFO (or) first in, first out
This cost flow assumption removes from inventory the oldest cost first and charges them to the cost of goods sold. As a result, the most recent costs remain in inventory.
FIFO (or) first in, first out
This cost flow assumption removes from inventory the oldest cost first and charges them to the cost of goods sold. As a result, the most recent costs remain in inventory.
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