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

4. Merchandising Operations

Net Sales

Financial Accounting

4. Merchandising Operations

Net Sales

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Multiple Choice

Net operating income is income before interest and which of the following?

Depreciation

Dividends

Taxes

Cost of Goods Sold

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Understand the concept of Net Operating Income (NOI): It represents the income generated from operations before deducting interest and taxes. It excludes non-operating expenses and income.

Identify the components excluded from NOI: Interest and taxes are excluded because they are not directly related to the core operations of the business.

Clarify why depreciation, dividends, and cost of goods sold are not part of the exclusion: Depreciation is a non-cash expense included in operating expenses, dividends are distributions to shareholders and not part of operating expenses, and cost of goods sold is directly related to operations and included in the calculation of gross profit.

Focus on taxes: Taxes are excluded from NOI because they are considered a non-operating expense, calculated after determining operating income.

Conclude that Net Operating Income is income before interest and taxes, emphasizing its role in evaluating operational efficiency without the influence of financing or tax strategies.