Finance Accounting Assignment: Product vs Period Expense

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Finance Accounting Assignment: Product vs Period Expense


The income statement measures the success of the company. It shows how much revenue a company earned over a defined time period (a year or less). Costs and expenses incurred to generate revenues are subtracted to show how the company’s net income or loss. Income or loss is not the same as cash flow. A company can be profitable, but have poor cash flow or vice versa.

It may be fairly simple to prepare an income statement for a one-person company providing only one service and all payments are in cash. However, for large corporation there are many complications and issues to consider in preparing an income statement that fairly reflects the success of the company.

Required Materials

Read the appropriate chapters in one of the following text(s):

Edwards, J.D. & Hermanson, R.H. (2007) Accounting Principles: A Business Perspective. First Global Text Edition, Volume 1. Financial Accounting, pp. 250 – 271. Retrieved from


Walther, L.M. (2010). Principles of Accounting: A Complete Online Text, chapter 3. Retrieved from


Whitehead, G. (2008). Success in principles of accounting. Hodder Education. (read units 5 and 6). Retrieved from EBSCO.

Apple Investor Relations (n.d.) retrieved from

Samsung Investor Relations (n.d.) retrieved from

SEC (2007). Beginner`s Guide to Financial Statements. Retrieved from


Accounting- Income statement Name Institution Date Part I Revenue recognition Revenue recognition focuses on the timing and measurement of revenues, and transactions are identified as recording revenues and related expenses based on the revenue recognition basis (Gibson, 2010). Under the accrual basis, revenue is recognized when it is earned, and the income is matched with the expenses (Edwards, Hermanson, Ivancevich, & Pearlman, 2013). The revenue recognition approach recognizes all the earnings earned and expenses in the financial year, to provide a clearer picture of the company’s financial position. Proper revenue recognition reflects the profitability of a reporting entity, and stakeholders make decisions based on financial performance, and especially for the investors. Revenues increase net assets, and this is distinguished from other assets that do not generate net assets. The exchange of goods and services for the assets, which occur as part of business or core operations is considered revenues. Similarly, a loss that decreases the net assets a


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