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Crash Course in Accounting and Financial Statement Analysis, Second Edition
book

Crash Course in Accounting and Financial Statement Analysis, Second Edition

by Matan Feldman, Arkady Libman
February 2007
Intermediate to advanced
288 pages
6h 32m
English
Wiley
Content preview from Crash Course in Accounting and Financial Statement Analysis, Second Edition

Not All Income Is Revenue

A company may have other income streams, which are not related to its main operations. Examples include:

  • Interest income earned from investments

  • Income received from a legal settlement

These are not recorded as revenues, but rather as Other Income, and are accounted for on the income statement in a line below revenues.

Examples of Revenues

  • Sale of crude oil by Exxon Mobil

  • Sale of books by Amazon.com

  • Sale of hamburgers by McDonald’s

1. CVS
Exercise
Q1:In February 2005, CVS, a drugstore chain, recorded the following transactions:
  • Sold $500m in merchandise

  • Sold $100m in prescriptions

  • Won a legal settlement of $400m

  • Collected $20m in interest income from a bank account

Record total revenues for CVS in February 2005.

1. CVS
Solution
Q1:Record total revenues for CVS in February 2005.
Sold $500m in merchandise
Sold $100m in prescriptions
Won a legal settlement of $400m
Collected $20m in interest income from a bank account
Total revenue = $600m (merchandise and prescriptions) ...
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Publisher Resources

ISBN: 9780470047019Purchase book