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

An income statement reports a business’s:

cash inflows and outflows from operating, investing, and financing activities

revenues and expenses to determine net income or net loss

assets and liabilities at a specific point in time

owner’s equity changes over a period

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Verified step by step guidance

Understand the purpose of an income statement: It is a financial report that summarizes a company's revenues and expenses over a specific period to determine the net income or net loss.

Identify the key components of an income statement: These include revenues (income earned from business operations) and expenses (costs incurred to generate revenues).

Clarify what the income statement does NOT report: It does not include cash inflows and outflows (which are part of the cash flow statement), assets and liabilities (which are part of the balance sheet), or changes in owner’s equity (which are part of the statement of owner’s equity).

Relate the income statement to the accounting equation: Revenues and expenses directly impact the net income or net loss, which in turn affects the equity section of the balance sheet.

Conclude that the income statement's primary purpose is to report revenues and expenses to determine the net income or net loss for a specific period.