CONTENTS How to Use the CFA Program Curriculum xi Background on the CBOK xi Organization of the Curriculum xii Features of the Curriculum xii Designing Your Personal Study Program xiii CFA Institute Learning Ecosystem (LES) xiv Prep Providers xv Feedback xvi Financial Statement Analysis Study Session 6 Financial Statement Analysis (2) 3 Reading 17 Understanding Income Statements 5 Introduction 6 Components and Format of the Income Statement 6 Revenue Recognition 12 General Principles 13 Accounting Standards for Revenue Recognition 14 Expense Recognition: General Principles 18 General Principles 18 Issues in Expense Recognition: Doubtful Accounts, Warranties 22 Doubtful Accounts 22 Warranties 22 Issues in Expense Recognition: Depreciation and Amortization 23 Implications for Financial Analysts: Expense Recognition 27 Non-Recurring Items and Non-Operating Items: Discontinued Operations and Unusual or Infrequent items 28 Discontinued Operations 28 Unusual or Infrequent Items 29 Non-Recurring Items: Changes in Accounting Policy 30 Non-Operating Items 33 Earnings Per Share and Capital Structure a