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 statements about the income statement is correct?

The income statement reports a company's revenues and expenses over a specific period of time.

The income statement includes only cash transactions.

The income statement shows the financial position of a company at a specific point in time.

The income statement is also known as the statement of cash flows.

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Verified step by step guidance

Step 1: Understand the purpose of the income statement. The income statement is a financial report that summarizes a company's revenues, expenses, and net income (or loss) over a specific period of time, such as a month, quarter, or year.

Step 2: Clarify the distinction between the income statement and other financial statements. The income statement does not show the financial position of a company at a specific point in time—that is the role of the balance sheet. Additionally, the income statement is not limited to cash transactions; it includes both cash and non-cash items, such as depreciation and accrued expenses.

Step 3: Recognize that the income statement is not the same as the statement of cash flows. While the statement of cash flows focuses on cash inflows and outflows, the income statement focuses on revenues and expenses, regardless of whether they are cash-based.

Step 4: Identify the correct statement from the options provided. The correct statement is: 'The income statement reports a company's revenues and expenses over a specific period of time.' This aligns with the purpose and structure of the income statement.

Step 5: Review the incorrect options to reinforce understanding. The income statement does not include only cash transactions, does not show the financial position at a specific point in time, and is not known as the statement of cash flows.