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 are common misconceptions users of an income statement may have? (Select all that apply.)

Expenses reported are always paid in cash during the period.

All revenues reported have been collected in cash during the period.

The income statement reflects only the company's operating activities.

Net income represents the exact amount of cash generated by the company during the period.

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Understand the purpose of an income statement: The income statement is a financial report that summarizes a company's revenues, expenses, and net income over a specific period. It does not directly reflect cash flows or only operating activities.

Clarify the misconception about expenses: Expenses reported on the income statement are not always paid in cash during the period. Some expenses may be accrued or prepaid, meaning they are recognized based on the matching principle rather than actual cash payment.

Clarify the misconception about revenues: Revenues reported on the income statement are not always collected in cash during the period. Revenues are recognized when earned, which may involve accounts receivable rather than immediate cash collection.

Explain the scope of the income statement: The income statement reflects more than just operating activities. It includes non-operating items such as interest income, interest expense, and gains or losses from investments.

Address the misconception about net income: Net income does not represent the exact amount of cash generated by the company during the period. Cash generation is reflected in the cash flow statement, which accounts for operating, investing, and financing activities.