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

1. Introduction to Accounting

The Financial Statements

Financial Accounting

1. Introduction to Accounting

The Financial Statements

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Multiple Choice

The amount of net income calculated on an income statement is correct if:

only cash receipts and cash payments are included in the calculation

dividends paid are subtracted from revenues

all assets and liabilities are reported at their fair market value

revenues and expenses are both reported in accordance with the accrual basis of accounting

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Verified step by step guidance

Understand the concept of accrual basis accounting: Accrual basis accounting recognizes revenues when they are earned and expenses when they are incurred, regardless of when cash is received or paid.

Review the components of an income statement: An income statement reports revenues and expenses to calculate net income. It does not include cash receipts, cash payments, or dividends paid directly.

Clarify why cash basis accounting is incorrect: Cash basis accounting only considers cash transactions, which can lead to inaccurate net income calculations because it ignores non-cash transactions like accounts receivable and accounts payable.

Explain why fair market value is irrelevant for net income: Reporting assets and liabilities at fair market value is related to the balance sheet, not the income statement. Net income is determined by revenues and expenses, not asset valuations.

Conclude that the correct approach is accrual basis accounting: To ensure the net income is accurate, revenues and expenses must be reported in accordance with the accrual basis of accounting, as this method matches income and expenses to the period in which they occur.