Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Single-step Income Statement

Financial Accounting

4. Merchandising Operations

Single-step Income Statement

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Multiple Choice

Which financial statement shows how well a company performed over the past year?

Statement of Retained Earnings

Income Statement

Statement of Cash Flows

Balance Sheet

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Understand the purpose of each financial statement: The Income Statement shows a company's performance over a specific period, including revenues, expenses, and net income. The Statement of Retained Earnings explains changes in retained earnings. The Statement of Cash Flows details cash inflows and outflows. The Balance Sheet provides a snapshot of assets, liabilities, and equity at a specific point in time.

Identify the key requirement of the question: The problem asks which financial statement reflects the company's performance over the past year. Performance is typically measured by revenues, expenses, and net income.

Relate the concept of performance to the financial statements: The Income Statement is specifically designed to show how well a company performed by summarizing its revenues and expenses, resulting in net income or loss for the period.

Eliminate incorrect options: The Statement of Retained Earnings focuses on changes in retained earnings, not overall performance. The Statement of Cash Flows focuses on cash activities, not profitability. The Balance Sheet provides a snapshot of financial position, not performance.

Conclude that the correct financial statement to assess performance over the past year is the Income Statement, as it directly reports revenues, expenses, and net income.