Intermediate Accounting 14th Edition

Published by Wiley
ISBN 10: 0470587237
ISBN 13: 978-0-47058-723-2

Chapter 2 - Conceptual Framework for Financial Reporting - Questions - Page 68: 11

Answer

Investments by the owners vary from gains and revenue in that they signify transfers by the owners to the business, and they don't emerge from exercises planned to bring income. Revenues differ from gains in that they emerge from the organizations’ central or major operations. Gains emerge from incidental or peripheral transactions.

Work Step by Step

Between investment, revenues and gains, business entities should always aim at maximizing revenues, which reflects increased profit margin and income for the owners.
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