Classification and Format in the Income Statement Essay Example for Free

Classification and Format in the Income Statement Essay Investors commonly assess a firm’s value based on the firm’s expected future sustainable earnings stream. To inform analysts and other financial statement users about sustainable earnings, firms often report income from recurring business activities separately from income effects from unusual or nonrecurring activities (such as asset impairments, restructuring, discontinued business segments, and extraordinary events). To provide more useful information for prediction, U.S. GAAP (Generally Accepted Accounting Principles) requires that the income statement include some or all of the following sections or categories depending on the nature of the firm’s income for a period: †¢Income from Continuing Operations. Reports the revenues and expenses of activities in which a firm anticipates an ongoing involvement. When a firm does not have items in the second and third categories of income in a particular year, all of its income items are related to continuing operations; so it does not need to use the continuing operations label. Firms report their expenses in various ways. Most firms in the United States report expenses by their function: cost of goods sold for manufacturing, selling expenses for marketing, administrative expenses for administrative management, and interest expense for financing. Other firms, particularly those in the European Community, tend to report expenses by their nature: raw materials, compensation, advertising, and research and development. †¢Income from Discontinued Operations. A firm that intends to remain in a line of business but decides to sell or close down some portion of that line (such as closing a single plant or dropping a line of products) generally will report any income, gain, or loss from such an action under continuing operations. On the other hand, if a firm decides to terminate its involvement in a line of business (such as selling or shuttering an entire division or subsidiary), it will report the income, gain, or loss in the second section of the income statement, labeled â€Å"Income, Gains, and Losses from Discontinued Operations.† †¢Extraordinary Gains and Losses. Extraordinary gains and losses arise from events that are (1) unusual given the nature of a firm’s activities, (2) nonrecurring, and (3) material in amount. Corporate annual reports rarely disclose such items. Many firms have reported restructuring charges and impairment losses in their income statements in recent years. Such items often reflect the write-down of assets or the recognition of liabilities arising from changes in economic conditions and corporate strategies. Because restructuring charges and impairment losses do not usually satisfy the criteria for discontinued operations or extraordinary items, firms report them in the continuing operations section of the income statement. If the amounts are material, they appear on a separate line to distinguish them from recurring income items. Income, gains, and losses from discontinued operations and extraordinary gains and losses appear in the income statement net of any income tax effects. The majority of published income statements include only the first section because discontinued operations and extraordinary gains and losses occur infrequently.

American Democracy Essay -- Government Politics US Essays Political Sc

American Democracy The American democracy is one of the most peaceful kinds of government in the world although it is a long way from utopia. The democracy in which we live has many strengths and weaknesses. Neither strengths or weaknesses out weigh one another, but it is necessary to have both due to the varying definitions. A democracy is a government that is run by the people. The politicians that we elect to run our government are human and they are susceptible to mistakes based on their own strengths and weaknesses. The strengths and weaknesses they possess are reflected into our government but at least â€Å"we the people† elect them and they are not chosen for us. We live in a representative democracy that means â€Å"we the people† are given the right to elect those who represent our beliefs and values. The political campaigns of the politicians allows us the freedom of who to elect by selling us their views on how they feel our government should function. Many of the campaigns seem to dispute the candidate running against the other(s) but it normally ties into what they believe is wrong. Sometimes a candidate's campaign will run according to one of the candidates mistakes that they have made in office or in life. The candidate may then promise they would never make a mistake of that sort. The campaigns now days tend to be more on the negative side but negativity sells in this country. While positive campaigns reflect more on the positive goals of the campaignee it ...

Effects of Job Rotation Essay

Discuss the various issues of managerial behaviour and related matters raised by this case study Laurie J. Mullins argues that A fist step in the effective management of other people is confidence in your own ability, and awareness of your own strengths and weaknesses. Why is it then that managers find it difficult to admit their mistakes, to say sorry or to laugh at themselves? 1 In the building society case study, there are examples of bad managerial behaviour on the part of both Mary Rodgers, the branch manager and Jane Taylor, the senior branch assistant. Jane Taylor was clearly good at her job if, after four years, she was promoted to this new role, yet within a short period of time, she was having trouble with Tony Jackson. Looking back at what Mullins said, Miss Taylor doesn’t appear to have confidence in her own ability or indeed awareness in her own strengths and weaknesses. According to Thompson ;amp; McHugh â€Å"control is not an end in itself, but a means to transform the capacity to work established by the wage relation into profitable production†, and Jane is unable to control her sub-ordinate – what are the reasons for this? Part of the problem stems from the beginning of the case study and the relationship between Jane and her manager. Mary Rogers does not instil any confidence in Jane when she effectively ‘dumps’ this new role. Up until now, Jane has been performing specific task functions and has no real knowledge of how to manage people as she has previously been performing the duties of a cashier and looking after mortgage advice accounts – more task orientated skills rather than managerial ones. The refresher course she attends includes nothing on this either and Jane immediately falls into what McGregor calls the ‘Theory X’ assumption of human nature. The central principle of ‘Theory X’ is direction and control through a centralised system of organisation and exercise of authority2 and Jane automatically tries to coerce and direct Tony Jackson. The inability of Mary Rodgers to provide effective support and development for Jane shows a clear ineptitude on her part. She admits herself that the reason for Jane’s promotion is that â€Å"I [Mary] need someone to take some of the weight off my shoulders† and she seems to be reluctant to help intervene and solve

Chapter 3 Finance - 993 Words

Nicole Morrissey CQ 4, 7 BUS2215 Problems 1-8, 12, 17, 18 February 8, 2012 4. Financial Ratios Fully explain the kind of information the following financial ratios provide about a firm: Quick Ratio | This ratio measures a company’s ability to meet its short-term obligations with its most liquid assets, which is why inventory is omitted. | Cash Ratio | This assesses a company’s financial durability by examining whether it is at least profitable enough to pay off its interest expenses. | Total Asset Turnover | Tells us the amount of sales generated for every dollar worth of assets. | Equity Multiplier | Tells us how a company uses debt to finance its assets. | Long-term Debt Ratio | Measures†¦show more content†¦0.1827 = Equity Multiplier (0.068*1.95) 1.3778 = Equity Multiplier Equity Multiplier = 1 + Debt to Equity Ratio 1.3778 – 1 = Debt to Equity Ratio 0.3778 = Debt to Equity Ratio 12. Debt to Equity Ratio = 0.65 times ROA = 8.5% Total Equity = $540,000 Equity Multiplier = 1 + D/E = 1.65 ROE = ROA * Equity Multiplier ROE =Net Income/Total Equity = 0.085 * 1.65 0.14 =Net Income/ $540,000 = 14% 0.14*$540,000 = Net Income $75,600 =Net Income 17. Ratio | 2008 | 2009 | Current Ratio = CA/CL | = $68,276/$61,434 = 1.11 times | = $76,213/$64,203= 1.19 times | Quick Ratio = (CA – Inventory)/CL | = ($68,276-$28,760)/$61,434 = 0.48 times | = ($76,213 - $42,650)/$64,203= 0.52 times | Cash Ratio = Cash/CL | = $8,436/$61,434 = 0.14 times | = $10,157/$64,203= 0.16 times | NWC to Total Assets = NWC/TA (CA – CL)/TA | = ($68,276 - $61,434)/$295,432 = 0.023= 2.3% | = ($76,213- $64,203)/$324,519= 0.037= 3.7% | Debt to Equity Ratio = TD/TE | = $86,434/$208,998 = 0.41 times | = $96,203/$228,316= 0.42 times | Equity Multiplier = 1 + D/E | = 1 + 0.41 = 1.41 times | = 1 + 0.42= 1.42 times | Total Debt RatioShow MoreRelatedFraternity Extension Program And Report1473 Words   |  6 Pagesestablishment of a new chapter, the procedure shall be: 1. To comply with the National Panhellenic Conference Unanimous Agreements on extension, including verification from the proper authority that the campus is open for extension. 2. 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