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

Fundamental Accounting Equation

Financial Accounting

1. Introduction to Accounting

Fundamental Accounting Equation

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Multiple Choice

What is value added and how is it calculated? Value added refers to:

The total amount of assets owned by a company minus its liabilities.

The sum of all expenses incurred during a period.

The profit earned after deducting all operating expenses from gross profit.

The difference between a company's sales revenue and the cost of goods and services purchased from external suppliers.

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Verified step by step guidance

Understand the concept of value added: Value added represents the economic value a company creates by transforming inputs into outputs. It is calculated as the difference between the company's sales revenue and the cost of goods and services purchased from external suppliers.

Identify the sales revenue: Sales revenue is the total income generated from selling goods or services during a specific period. This figure is typically found on the income statement.

Determine the cost of goods and services purchased from external suppliers: These costs include expenses for raw materials, outsourced services, and other inputs acquired from outside the company. These are not internal costs like wages or depreciation.

Subtract the cost of goods and services purchased from external suppliers from the sales revenue: This calculation isolates the value added by the company through its operations and internal processes.

Interpret the result: The value added figure reflects the contribution of the company to the economy, including its ability to generate profit, pay wages, and invest in future growth.