Income Statement

Revenue - Expense = net income

Multi-step income statement

Revenue - COGS = Gross Profit
Gross Profit - Selling, General, and Administrative Expense- Depreciation = Operating Profit
Operating Profit - Interest Expense = Income Before Tax
Income Before Tax - Tax Provision = Income from Continuing Operations
Income from Contnuing Operations - Earnings/losses from Disconitinued operations, net of tax = Net Income

The SEC provides additional guidance by listing 4 criteria to determine whether revenue should be recognized:

1. There is evidence of an arrangement between the buyer and seller.
2. The product has been delivered or the service has been rendered.
3. The price is determined or determinable.
4. The seller is reasonably sure of collecting money.

Long term contract:
Percentage-of-completion method vs. Completed-contract method
Installment method vs. Cost recovery method (similar with above)

Users of financial information must consider 3 points when analyzing a firm's revenue:
1. How conservative are the firm's revenue recognition policies?
2. he extent to which the firm's policy on judgment and estimates.

*period costs aer the expenses that can't be directly ried to revenue generation.

Depreciation:
1. Straight-line depreciation (SL)

SL Depreciation expense = (Cost - Residual Value) / Useful Life

2. Accelerated depreciation method
Declining Balance Method (DB)
Double Declining Balance Method (DDB)

DDB depreciation = (2 / useful life )(cost - accumulated depreciation)
*注意题中给出的残值，倒数第2年求得的折旧>最后一年要求的残值。最后一年的折旧就成 倒数第2年的残值 - 既定残值

Inventory:
1. Specific identification method
2. FIFO
3. LIFO
4. Weighted average cost

Nonrecurring items:

Discontinued operations
企业的某项经营业务已经能够以出售，废弃，拆除或其他方式予以处置；或该项营业虽仍在经营，但已有计划将其进行处置。将其放在持续经营项目(continuing operation)之后，非常项目(extraordinary item)之前。

Unusual or infrequent items
非正常或者非经常项目。如固定资产盘盈盈亏，资产处置的净收益/损失，资产报废，资产减记，重组成本。

Extraordinary items
非常项目，即非正常和非经常发生的项目。如资产损失，天灾损失，和提早偿还债务所产生的损益。此项目需在利润表中持续经营利润之后单独列示税后净额。

EPS的讲解另开专题

Gross profit margin = Gross profit / Revenue
Net profit margin = Net income / Revenue

Other comprehensive income:

1. Foreign currency translation gains and losses
2. Adjustments for minimum pension liability
3. Unrealized gains and losses from cash flow hedging derivatives
4. Unrealized gains and losses from available-for-sale securities