This chapter has a twofold purpose: (1) to consider important issues dealing with income statement content, presentation, and disclosure and (2) to provide an overview of the statement of cash flows, which is covered in depth in Chapter 21.
Explain the difference between net income and comprehensive income and how we report components of the difference. |
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Discuss the importance of income from continuing operations and describe its components. |
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Describe earnings quality and how it is impacted by management practices to manipulate earnings. |
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Discuss the components of operating and nonoperating income and their relationship to earnings quality. |
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Define what constitutes discontinued operations and describe the appropriate income statement presentation for these transactions. |
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Define extraordinary items and describe the appropriate income statement presentation for these transactions. |
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Describe the measurement and reporting requirements for a change in accounting principle. |
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Explain the accounting treatments of changes in estimates and correction of errors. |
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Define earnings per share (EPS) and explain required disclosures of EPS for certain income statement components. |
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Describe the purpose of the statement of cash flows. |
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Identify and describe the various classifications of cash flows presented in a statement of cash flows. |