Fsa Balance Sheet

FINANCIAL STATEMENT ANALYSIS ACC-504
Instructor: Dr. Kumail Rizvi

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21/5/2013

Kumail Rizvi, PhD, CFA, FRM

INCOME STATEMENT
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Grouping of the expenses
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21/5/2013

Grouping by Nature Grouping by Function

Kumail Rizvi, PhD, CFA, FRM

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Formatting
Multi-step format (GP Subtotal)  Single-Step format (No GP subtotal)
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REVENUE
21/5/2013

Profit = Income – Expenses  “Income is increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants”  Income includes Revenue and Gains
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Kumail Rizvi, PhD, CFA, FRM

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IASB, IAS NO. 18, REVENUE
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Conditions for recognizing revenue
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21/5/2013

Transfer the risk and rewards of ownership of goods No retention of Managerial involvement and effective control Amounts can be measured reliably Probability of flow of economic benefits Cost incurred or to be incurred can be measured reliably

Kumail Rizvi, PhD, CFA, FRM

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Goods sold on consignment should not be recognized when transferred

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IASB, IAS NO. 18, SERVICES
When the outcome estimation is reliable, recognized revenues with reference to the stage of completion at the balance sheet date  Conditions for reliable estimation of outcome
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21/5/2013 Kumail Rizvi, PhD, CFA, FRM

Amount can be measured reliably  Probability of flow of economic benefits  Stage of completion can be measured reliably  Cost incurred or to be incurred can be measured reliably
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Disclose revenue recognition policies in footnotes
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FASB 605-10-25, REVENUE RECOGNITION
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Realized or Realizable and Earned
Evidence of Arrangement: No delivery before the contract  Product or Service has been delivered. Shipping only is not sufficient  Price is determined or determinable. No Contingency price is allowed  Seller is reasonably