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

Depreciation expense is reported on which of the following financial statements?

Statement of Changes in Equity

Income Statement

Balance Sheet

Statement of Cash Flows

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Understand the concept of depreciation expense: Depreciation is the allocation of the cost of a tangible asset over its useful life. It represents the wear and tear or usage of the asset and is recorded as an expense in the financial statements.

Identify the purpose of the Income Statement: The Income Statement reports a company's revenues and expenses over a specific period, ultimately showing the net income or loss. Depreciation expense is categorized as an operating expense and reduces the company's net income.

Clarify why depreciation expense is not reported on the Balance Sheet: The Balance Sheet shows the company's assets, liabilities, and equity at a specific point in time. While accumulated depreciation (a contra-asset account) is reported on the Balance Sheet, the periodic depreciation expense itself is not included here.

Explain why depreciation expense is not part of the Statement of Changes in Equity: The Statement of Changes in Equity tracks changes in equity accounts, such as retained earnings, due to net income, dividends, or other adjustments. Depreciation expense indirectly affects retained earnings through its impact on net income but is not directly reported here.

Discuss why depreciation expense is not reported on the Statement of Cash Flows: The Statement of Cash Flows shows cash inflows and outflows from operating, investing, and financing activities. Depreciation expense is a non-cash item and is added back to net income in the operating activities section to reconcile cash flows, but it is not directly reported as an expense.