Nobody downloaded yet

Income Statement - Case Study Example

Comments (0) Cite this document
Summary
Income Statement Name Professor Institution Course Date The definition of the concept of revenue recognition is provided for under the Generally Accepted Accounting Principles (GAAP). According to GAAP, the concept of revenue recognition is used in determining the specific conditions under which an entity records income as revenue…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER92.9% of users find it useful
Income Statement Case Study
Read TextPreview

Extract of sample "Income Statement"

Download file to see previous pages Revenue recognition is a significant issue because it is among the principles outlined under the GAAP that are to be followed when recording financial statements. In the field of accounting, the preparation of financial statements is guided by a number of principles. One of the main principles of accounting is the Generally Accepted Accounting Principles (GAAP). GAAP outlines a series of principles including the principle of revenue recognition. It outlines that entities should record and recognize revenue when a product has been delivered or there is the completion of a service. This includes the entity not having any regard to the timing of cash flow from the operations of the organization. For instance, if a business makes an order of one hundred compact discs from their supplier during the month of January, receives them in February and make payments in March. The wholesaler should record revenue in the month of February when he made the delivery rather than in January when a business deal was established or in March when payment for delivery was received (Porter and Norton, 2009). The matching principle requires that business entities match their expenses with related revenues during the same financial period. The principle is majorly applicable in the determination of income for a specific time period. This is because the measurement of income involves the matching of revenues earned and the expenses incurred in the process of earning revenues (Norton, Diamond and Pagach, 2006). The first step in recording income for a business involves the determination of revenue which is later on followed by the deduction of the expenses incurred in earning that revenue figure. This eventually results in the determination of the net income figure. The idea behind the concept of the matching principle is that there is a cause and effect relationship between revenues and expenses. For instance, sales are as a result of the cost of goods sold expense and sales commissions. Part II Apple Inc is a US based company that specializes in the design and marketing of consumer electronics, software and personal computers. The company is one of the best performing companies in the global business market. Philips on the other hand is a Dutch company that specializes in the manufacturing of electronics. The company has emerged to be one of the strongest electronic brands in the global market. I have two financial periods for the companies including 2010 and 2009. The financial statements for Apple Inc and Philips are located under the following links: Apple Inc. http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?symbol=AAPL http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?lstStatement=Balance&stmtView=Qtr&symbol=US%3aAAPL http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?lstStatement=CashFlow&stmtView=Ann&symbol=US%3aAAPL Philips http://www.philips.com/shared/assets/Downloadablefile/Investor/Annual_Report_Full_English_2009.pdf http://www.philips.com/shared/assets/Investor_relations/pdf/Annual_Report_English_2010.pdf Apple Inc and Philips follow the Generally Accepted Accounting Principles convention (GAAP) under their respective countries. Apple Inc prepares its financial statements on a basis that is consistent with the US GAAP whereas Philips prepares its fina ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Income Statement Case Study Example | Topics and Well Written Essays - 750 words”, n.d.)
Income Statement Case Study Example | Topics and Well Written Essays - 750 words. Retrieved from https://studentshare.org/business/1440684-income-statement
(Income Statement Case Study Example | Topics and Well Written Essays - 750 Words)
Income Statement Case Study Example | Topics and Well Written Essays - 750 Words. https://studentshare.org/business/1440684-income-statement.
“Income Statement Case Study Example | Topics and Well Written Essays - 750 Words”, n.d. https://studentshare.org/business/1440684-income-statement.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Income Statement Case Study

Cash flow statement and report

.... (a) The cash flows from operating activities are showing a negative $ 5,000 which shows that the company has invested heavily in its working capital and also paying off its major liabilities. The cash flow statement starts from the net income taken from the income statement of the company. No figure of tax is mentioned in the profit and loss statement of the company so it is assumed that the net income is profit before tax and the tax paid is incorporated in the tax payable figure. From the net income non cash adjustments have been made such depreciation and loss recorded on sale of fixed asset. Since these items were...
5 Pages(1250 words)Case Study

The Flat Income Tax

...The Flat Income Tax: A Policy Whose Time Has Come The income tax in the United s has evolved from a simple system designed to generate revenue to a complex process of economic engineering and politicized monetary management. In an effort to implement the complicated maze of US tax laws, the Internal Revenue Service (IRS) has grown to become one of the largest bureaucratic institutions in the world. To eliminate this burden from the individual taxpayer as well as businesses, tax reform advocates have suggested that we move to a flat income tax system. Under the proposed system would be taxed at an identical rate, which some legislators have proposed to be 17 percent (Armey 24). In...
6 Pages(1500 words)Case Study

Financial Statement Analysis

...CURRENT RATIO AND QUICK RATIO Computation of Liquidity Ratios for AutoZone Inc. (a) Current Ratio = Current Assets Current Liabilities Current Assets of AutoZone as on 30-Aug-2008: Assets Amount ($) Cash and Cash Equivalents 242,461 Short term Investments - Net Receivables 71,241 Inventory 2,150,109 Other Current Assets 122,490 Total Current Assets 2,586,301 Current Liabilities of AutoZone as on 30-Aug-2008: Liabilities Amount ($) Accounts Payable 2,395,511 Short term Debt 15,917 Other Current Liabilities 107,892 Total Current Liabilities 2,519,320 Current Ratio = 2,586,301 / 2,519,320 = 1.03 times (b) Quick Ratio = Quick Assets / Current Liabilities Quick Assets = Total Current Assets - Inventory = 2,586,301 - 2,150,109... RATIO AND QUICK ...
2 Pages(500 words)Case Study

DeVany's statement

...DeVany's ment a) For the period 1994 to 1999 calculate the Herfindahl index (H). Interpret your results and assess whether the Anti-trust authorities should be concerned. Takeover activity peaked again during the financial boom of the 1920's in what Jovanovic and Rousseau [2002] termed the "scale-economies wave." Improvements in marketing technique (including advertising, especially on radio) and technological developments including electrification, transportation and communications systems all contributed to this increased takeover activity. Allied Chemical was one of the corporate giants formed from takeover activity during this period. There were a large number of horizontal, vertical and conglomerate takeovers in the 1920s... ment a)...
2 Pages(500 words)Case Study

Income Statement

...Scenario Ted has been trading for a number of years, buying and selling fruit and vegetables from a shop in Highgate. Ted is keen to expand the business by making and serving freshly squeezed juices and smoothies. This would mean rearranging the shop to include a counter, equipment, sinks and seating and taking on extra staff. The Income Statement for the fruit and vegetable business for the year ended 5 April 2009 is shown below: ' ' Sales of fruit and vegetables 85 000 Less cost of goods sold (35 000) Gross profit 50 000 Rental income received (Note 1) 7 800 Bank interest (Note 2) 1 600 Profit on sale of equipment (Note 3) 100 9500 59 500 Less expenses: Wages and...
4 Pages(1000 words)Case Study

Cash flows(inflow-outflow-operating,investing,financing), Depreciation, Ratios,Income Statement, Retained earning Statement, Internal control procedures

...  424,000 244,800 Question No. 3 Leasing Company Income Statement for the year ended 2010 Sales Revenue 115,000 Cost of goods sold (53,000) Gross Profit 62,000 Depreciation Expense (6,300) Salaries Expense (42,000) Interest Expense (4,300) Net Profit 9,400 Leasing Company Statement of retained earnings year ended 2010 Retained earnings, January  1 80,000 Net profit for the year 9,400 Dividend Paid (5,300) Retained earnings, December  31 84,100 Question No. 4 Internal Control Strength or Weakness Principle Recommendation All checks are printed using indelible ink. Strength Proper Authorization N/A Cash register tapes are used. Strength Adequate documentation...
3 Pages(750 words)Case Study

Financial Statement/Audit Report Review

...Financial ment/Audit Report Review: Analysis of Cincinnati s financial ments submission Introduction State law requires every City to prepare and publish a complete set of its financial statements for the results of fiscal operations in accordance with the generally accepted accounting principles (GAAP). This preparation is the responsibility of the Department of Finance that maintains the completeness of the data, accuracy, disclosures including its fair presentation. This paper will review the City of Cincinnati’s audited Comprehensive Annual Financial Report (CAFR) for the year ended December 31, 2011. In light of GAAP, management team should avail a narrative introduction overview and analysis to entity’s basic...
4 Pages(1000 words)Case Study

Financial statement auditing analysis

...Financial ment auditing analysis By Company Analysis of PART A From the financial ments, the management commentary in the annual report and other sources, and using appropriate auditing procedures, identify FIVE areas of heightened audit risk relating to the audit of this company. Explain why you consider these areas of increased audit risk Auditing is an art in itself in the sense that, numerous procedures that guides it operations in various procedures. The process of auditing seeks to ensure that the financial statements and other documents are complete, they really occurred, correctly classified, accurate and well disclosed. This essay seeks to examine five areas of heightened audit risk relating to the audit of the...
7 Pages(1750 words)Case Study

CASE STUDY - Financial Statement Analysis

...years. 6. Return on Equity ratio Return on Equity ratio= Net Income/ Shareholders’ equity x 100% Chem-Med’s ROE for 2010= $1,150,000/ $ 2,062,000 x 100%= 55.78%.This shows that Chem-Med’s ROE is above that of Pharmacia and industry, which are 29.56% and 12.29% respectively. Using Du pont method, Chem-Med’s financial position is far much better than Pharmacia. Du Pont method analyses ROE in three parts that include profitability (profit margin), operational efficiency (asset turnover) and financial leverage. ROE= profit margin x asset turnover/ (1-debt to assets). For Chem-Med; ROE =1150/3814 x {net sales/average total assets}/ (1-Debt to assets). =1150/3814 x {3814/4491}/1-0.14) =0.32 x...
2 Pages(500 words)Case Study

FINANCIAL STATEMENT RATIO ANALYSIS CASE

...of the debt to asset ratio is debt / assets (Finkler 102). Ratio presentation Balance Sheet Items 2013 2012 2011 Current Assets 1.41 B 1.29 B 1.24 B Non- Current Assets 670 M 530 M 440 M Inventory 765 M 792 M 769 M Total Assets 2.08 B 1.82 B 1.68 B Current Liabilities 239.83 M 204.17 M 187.82 M Non-Current Liabilities 63.26 M 51.3 M 38.15 M Total Liabilities 303.09 M 255.47 M 225.97 M Equity 1.77 B 1.56 B 1.46 B Liabilities and Equity 2.08B 1.82 B 1.68 B Income Statement Items 2013 2012 2011 Sales 3.33 B 3.13 B 2.77 B Cost of Goods 1.61 B 1.52 B 1.34 B Gross Income 1.72 B 1.61 B 1.43 B Operating Expenses 1.01 B 941.24 M 859.37 M EBIT 710 M 668.76 M 570.63 M Other Expenses 261.36 M 248...
7 Pages(1750 words)Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Case Study on topic Income Statement Case Study for FREE!

Contact Us