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

Which of the following financial statements should be prepared first in the accounting cycle?

Statement of Retained Earnings

Statement of Cash Flows

Balance Sheet

Income Statement

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Verified step by step guidance

Understand the accounting cycle: The accounting cycle is a series of steps that businesses follow to record, summarize, and report financial transactions. The preparation of financial statements is one of the final steps in this cycle.

Recognize the sequence of financial statements: Financial statements are prepared in a specific order because the information from one statement is often used in the preparation of the next. The typical order is: Income Statement, Statement of Retained Earnings, Balance Sheet, and Statement of Cash Flows.

Identify the purpose of the Income Statement: The Income Statement reports a company's revenues and expenses over a specific period, resulting in net income or net loss. This net income figure is essential for preparing the Statement of Retained Earnings.

Understand the dependency of other statements: The Statement of Retained Earnings uses the net income from the Income Statement to calculate the ending retained earnings balance. The Balance Sheet then uses the retained earnings figure as part of the equity section.

Conclude why the Income Statement is prepared first: Since the Income Statement provides the net income figure required for subsequent statements, it must be prepared first in the accounting cycle.