How do we account for operating activities? This chapter considered the estimation and reporting of revenues and expenses. A company’s income statement is affected by estimates of sales returns, doubtful accounts, warranty costs, inventory costs, and similar items. Also, it is affected by whether revenues and expenses require separate reporting and whether they are associated with recurring or non-recurring activities. Why should stockholders and other decision makers care about estimation methods and in which part of the income statement a company reports its business activities?