Wiley GAAP: Practical Implementation Guide and Workbook

Chapter 3. INCOME STATEMENT (ASC 225)

INTRODUCTION

A primary focus of financial reporting is to provide information about an entity's performance that is useful to present and potential investors, creditors, and others when they are making financial decisions. Performance is measured primarily by net income and its components, which are provided in the income statement. An income statement reflects information about transactions and events occurring over a period of time.

SCOPE

The requirements of ASC 225 apply to general-purpose financial statements that purport to present the results of operations in conformity with generally accepted accounting principles (GAAP).

Definitions of Key Terms

Comprehensive income. The change in equity of a business entity during a reporting period from transactions and other events and circumstances from nonowner sources. It includes all changes in equity during a period, except those resulting from investments by and distributions to owners.

Expenses. Decreases in assets or increases in liabilities during a period resulting from delivery of goods, rendering of services, or other activities constituting the reporting entity's central operations.

Extraordinary item. Events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence.

Revenues. Increases in assets or decreases in liabilities during a period from delivering goods, rendering services, or other activities constituting the entity's central operations. ...