RSM219H1 Chapter Notes - Chapter 4: Profit Margin, Cash Flow, Net Income
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RSM219H1 Full Course Notes
Verified Note
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Document Summary
Revenues inflows of economic benefits from a company"s ordinary operating activities. Result in inflows such as cash or are and are generated by the transactions a company normally has with its customers. Quantity refers to the amount of revenue and whether or not the trend shows an increase or decrease over a number of accounting periods. Quality refers to the source(s) of revenue and the company"s ability to sustain the revenue over the longer term. Under the accrual basis, revenues are recognized when they are earned regardless or whether the related cash was received by the company. Another way the equality of earnings is measured is to compare the cash flow form operations (from the statement of cash flows) with net income. If these 2 amounts of moving in the same direction, and if the cash flow from operating activities is greater than the net income, we consider the earnings to be of higher quality.
