#cfa-level-1 #reading-25-understanding-income-statement
The definition of income encompasses both revenue and gains and the definition of expenses encompasses both expenses that arise in the ordinary activities of the business and losses.
Thus,
net income (profit or loss) can be defined as:
a) income minus expenses, or equivalently
b) revenue plus other income plus gains minus expenses, or equivalently
c) revenue plus other income plus gains minus expenses in the ordinary activities of the business minus other expenses, and minus losses.
The last definition can be rearranged as follows: net income equals:
(i) revenue minus expenses in the ordinary activities of the business, plus (ii) other income minus other expenses, plus (iii) gains minus losses.
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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENTestitures in fiscal 2009. Kraft discloses in the notes to consolidated financial statements that the assets sold included a nutritional energy bar operation in the United States, a juice operation in Brazil, and a plant in Spain.
<span>The definition of income encompasses both revenue and gains and the definition of expenses encompasses both expenses that arise in the ordinary activities of the business and losses.6 Thus, net income (profit or loss) can be defined as: a) income minus expenses, or equivalently b) revenue plus other income plus gains minus expenses, or equivalently c) revenue plus other income plus gains minus expenses in the ordinary activities of the business minus other expenses, and minus losses. The last definition can be rearranged as follows: net income equals (i) revenue minus expenses in the ordinary activities of the business, plus (ii) other income minus other expenses, plus (iii) gains minus losses.
In addition to presenting the net income, income statements also present items, including subtotals, which are significant to users of financial statements. Some of the ite Summary
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