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Accounting for Non-Accountants, 9th Edition by David Horner

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04

Further adjustments to the income statement

Introduction

The concept of profit as the surplus of income over expenses should not be too difficult to understand. However, in this chapter we are going to extend the idea of what we mean by income and expenses beyond those that were covered in Chapter 2. We have already seen that profit is more complex than simply the difference between money coming in and money going out, but we are going to look at further entries that will be made in the income statements of an organization.

Underpinning the construction of the income statement are a number of accounting concepts and conventions. These are rules (not strictly speaking always in the legal sense of the word ‘rule’) that are to be followed when ...

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