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

3. Accrual Accounting Concepts

Revenue Recognition and Expense Recognition

Financial Accounting

3. Accrual Accounting Concepts

Revenue Recognition and Expense Recognition

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following statements about expenditures on advertising is true?

Advertising expenditures are never reported on the income statement.

Advertising expenditures are recognized as revenue when the advertisement is published.

Advertising expenditures must always be capitalized as intangible assets.

Advertising expenditures are generally expensed in the period in which they are incurred.

Previous problemNext problem

Verified step by step guidance

Understand the nature of advertising expenditures: Advertising costs are typically considered operating expenses incurred to promote a company's products or services.

Review the accounting treatment for advertising expenditures: According to generally accepted accounting principles (GAAP), advertising costs are usually expensed in the period they are incurred, as they do not provide long-term benefits that can be capitalized.

Analyze why advertising expenditures are not capitalized: Capitalization is reserved for costs that provide future economic benefits, such as acquiring tangible or intangible assets. Advertising does not meet this criterion as its benefits are typically short-term.

Clarify why advertising expenditures are reported on the income statement: These costs are part of operating expenses and are included in the calculation of net income for the period.

Reject incorrect statements: Advertising expenditures are not recognized as revenue, nor are they excluded from the income statement. They are expensed in the period incurred, aligning with the matching principle in accounting.