Although there are varying ways to measure income, all of them share a common basic concept. That concept is that income represents a return over and above the investment. The purpose of the income statement is to summarize a company’s the profit generating activities , i.e., return on investment, that occurred during a particular reporting period. As such, the income statement is an historical document. It’s usefulness is derived from enabling the user to predict the future profitability and the future cash flows.
Chapter 4 focuses on the income statement, comprehensive income, and the statement of cash flows. As was true in Chapter 3, the material presented relates more to form than to substance.
The narrated PowerPoint lecture for this chapter has been broken into two parts. Part 1 focuses on the income statement and comprehensive income and how they are prepared. Part 2 looks at the statement of cash flows. The narrated PowerPoint lectures and solutions to selected exercises and problems can be found here. This content can be viewed on both a computer and an IOS/Android.