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

Given Simon Company's year-end balance sheets, which of the following financial statements would most directly show the company's profitability for the year?

Statement of Retained Earnings

Income Statement

Balance Sheet

Statement of Cash Flows

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

Identify the key term 'profitability' in the question. Profitability refers to the ability of a company to generate earnings compared to its expenses and other costs during a specific period.

Recognize that the Income Statement is the financial statement most directly related to profitability. It includes key components such as revenues, expenses, and net income, which are used to calculate profitability metrics like gross profit, operating profit, and net profit.

Eliminate other options based on their primary focus: The Balance Sheet does not show profitability but rather the financial position. The Statement of Retained Earnings shows changes in retained earnings, which are influenced by net income but do not directly display profitability. The Statement of Cash Flows focuses on cash movements, not profitability.

Conclude that the Income Statement is the correct answer because it directly shows the company's profitability for the year by summarizing revenues and expenses to calculate net income.