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WSP Accounting Crash Course Exam (The Income Statement) Questions and Answers | Rated A+ $10.49
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WSP Accounting Crash Course Exam (The Income Statement) Questions and Answers | Rated A+
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WSP Accounting Crash Course Exam (The Income Statement) Questions and Answers | Rated A+ Income statement & why its important - financial report that depicts the operating performance of a company over a specific period of time Its important because it facilitates the analysis of a company's g...

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  • September 26, 2024
  • 15
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • WSP Accounting
  • WSP Accounting

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WSP Accounting Crash Course Exam

(The Income Statement) Questions and

Answers | Rated A+


Income statement & why its important - ✔✔financial report that depicts the

operating performance of a company over a specific period of time



Its important because it facilitates the analysis of a company's growth

prospects, cost structure and profitability

Analysts an use the IS to identify the components and sources (drivers) of

net earnings



****also referred to as consolidated statement of earnings, the profits and

loss statement, statement of revenues and expenses

Revenue (top line on IS) - ✔✔Revenue represents proceeds from the sale

of goods and services produced or offered by a company; revenue is

referred to company top line.

, A company can have other income not tied to core operations (income for

legal settlements, cash collected, etc)

Accrual basis is revenue must be recorded only when it is earned and

measurable - ✔✔According to the revenue recognition principle, a

company cannot record revenue until it is earned -- that is, until that order

is shipped to a customer and collection from that customer, who used a

CC, is reasonably assured

Revenue Recognition Method 1: Multiple deliverables - ✔✔Fo sales of

bundles products, companies should assign individual values to each of the

bundled components → this is especially relevant in the software industry



ex: apple selling iphone that has price of hardware + software rights -->

recognize revenue of hardware immediately, but recognize software

revenue evenly over several yrs

Revenue Recognition Method 2: Long-term projects - ✔✔Multiple methods:



1: percentage of completion method: revenues are recognized on the basis

of the % of total work completed during the accounting period (eg Boeing

plan example)

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