Name: Financial statements - Lecture 4 Income Statement (ASPE)
Uploaded: 2017-06-23T13:08:48.000Z
Duration: 7 min 12 s
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Gerund

And in this video, we'll start exploring financial statements,

what they look like, and how they're interconnected.

We'll be using ASPE, Accounting Standards

for Private Enterprises, to produce our statements.

Remember that external stakeholders, mainly investors,

to make decisions about resource allocations--

They use financial statements to answer questions

we know that corporations can be either public or private.

Private corporations can follow either IFRS or ASPE.

will produce the following financial statements-- income

statement, statement if retained earnings,

balance sheet, and the statement of cash flows.

Corporations who follow IFRS, whether public or private,

must produce the following statements-- income statement,

statement of changes in equity, statement

of financial position, and finally, the statement of cash

If you wish to learn more about these statements,

go to my video on IFRS financial statements.

In these videos, we'll only be covering ASPE.

Statements must be completed in a specific order

and we'll start with the income statement.

of a businesses day-to-day operations-- the revenues,

less the expenses incurred to generate that revenue,

to obtain a profit figure called net income.

The income statement measures the business's performance

within a period of time either annually, quarterly,

To better understand the income statement,

we have to understand the two main elements-- revenues

Revenues are the income that a business earns.

Businesses either provide a service or a good.

The key to revenue is that it must be earned.

It means that the business has done their job--

it has not earned revenue today, because they have not

After they've finished mowing the customer's lawn,

If a retail store plans to sell a product to a customer

tomorrow, revenue is not earned because, again, the business

Revenues can only be recognized when the business has

finished the job, provided the service, or delivered the good.

that's very important with regards to the element revenue.

through the day-to-day activities of a business

Revenue-- earned by providing services or goods.

that have been used, consumed, or incurred to help

Expenses are best described through an example.

If you use gas in a lawnmower when you move a customer's

lawn, then the gas that was consumed during the moving

Because the gas was consumed in order to help

Note that the concept of used, consumed, or incurred

is important, but so is the fact that these things must

Costs or expenses must be matched to the revenue

Expenses-- cost of what is used, consumed, or incurred to help

The format of an income statement is important.

of the financial statement, and the time period covered.

individually, and then show a subtotal called total revenues.

Generally, they're placed in the order of magnitude-- meaning

Because remember the purpose of financial reporting--

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Financial statements - Lecture 4 Income Statement (ASPE)

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