MAC-1 Lecture 2 - Income Statement

8/11/2019 MAC-1 Lecture 2 - Income Statement

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C. A. Akila Kalyanaraman


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SOURCE : http://www.hul.co.in/investorrelations/AnnualReports/AnnualReport2012-13/Downloadcentre.aspx
http://www.hul.co.in/investorrelations/AnnualReports/AnnualReport2012-13/Downloadcentre.aspxhttp://www.hul.co.in/investorrelations/AnnualReports/AnnualReport2012-13/Downloadcentre.aspxhttp://www.hul.co.in/investorrelations/AnnualReports/AnnualReport2012-13/Downloadcentre.aspxhttp://www.hul.co.in/investorrelations/AnnualReports/AnnualReport2012-13/Downloadcentre.aspx


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Cash at

Bank

Purchase of

raw

materials

Conversion

into

finished

goods

Inventory of

WIP,

finished

goods

Sale to

customers

on account

Collection

of debtor

money

THE

OPERATINGCYCLE

SOURCE: http://www.businessbankertwincities.com/2011/12/small-business-loan-application.html
http://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.html


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Income Statement summarizes the Revenues andExpenses of an entity for an accounting period

Revenue: is the value of earnings resulting from the

operations of the entity during the current period.

Expense: is the cost of resources used during currentperiod for the operations of the entity.

Revenue minus Expense = Income

Income increases Owners Equity.


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Accounting Period Concept : Accountingmeasures activities for a specified INTERVALof time called Accounting period

Year - Annual Report

Quarter (Q1,Q2,Q3,Q4) - Interim Report

Eg: Income Statement for the year endedMarch 31st,2013.


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Conservatism Concept : explains WHENRevenueor Expense has to be recorded.

ANTICIPATE NO PROFITS

but,ANTICIPATE ALL LOSSES

Revenues are recognized only when they are reasonablycertain, whereas expenses are recognized as soon as they

are reasonably possible.

Eg: Sales Revenue, Accrued Interest


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Realization Concept : Indicates HOW MUCHtobe recognized as Revenue.

Eg: The amount of Sales Revenue will bewhat the customers are reasonably willing topay.

If sold at Discount on MRP, then

Sale Value = Discounted Price


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Matching Concept : When a given

event affects both Revenues and

Expenses, the effect on each

should be recorded in the same

accounting period.


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Expenditureis the cost incurred inacquiring goods or services to be usedas Asset or for Usage during theperiod, whether paid or unpaid.

Eg: Expenditure on purchase of

Office Computer - Asset

Paper for office use - Expense


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Expenditure

When

Current

PeriodExpense

Future Asset

What

Asset

Usage Expense


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Expenditure

incurred

during time

T

T

T

Payment

made

during time

T

T

T+1

Pertaining

to time

T

T+1

T

Recorded

as

Expense in

T

Asset in T

and

expense in

T+1

Liability in

T and

expense in

T

Example

Period

costs

Prepaid

Insurance

Unpaid

wages for

last month.


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Consistency Concept : Entity requiredto follow consistent accountingpractices.

eg: Inventory Valuation

Materiality Concept : Insignificant

events may be disregarded, but fulldisclosure of all importantinformation.


13/15SOURCE : http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/
http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/


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Anthony, Hawkins, & Merchant (AHM) Chapter3

http://www.hul.co.in/investorrelations/AnnualReports/AnnualReport2012-13/Downloadcentre.aspx

http://www.businessbankertwincities.com/2011/12/small-business-loan-application.html

http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/
http://www.hul.co.in/investorrelations/AnnualReports/AnnualReport2012-13/Downloadcentre.aspxhttp://www.hul.co.in/investorrelations/AnnualReports/AnnualReport2012-13/Downloadcentre.aspxhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://ashishtater.wordpress.com/2012/01/11/schedule-vi-revised-pl-format/http://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.businessbankertwincities.com/2011/12/small-business-loan-application.htmlhttp://www.hul.co.in/investorrelations/AnnualReports/AnnualReport2012-13/Downloadcentre.aspxhttp://www.hul.co.in/investorrelations/AnnualReports/AnnualReport2012-13/Downloadcentre.aspxhttp://www.hul.co.in/investorrelations/AnnualReports/AnnualReport2012-13/Downloadcentre.aspxhttp://www.hul.co.in/investorrelations/AnnualReports/AnnualReport2012-13/Downloadcentre.aspx


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Thank You

Documents

MAC-1 Lecture 2 - Income Statement