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 accounting document shows a business’s revenues and expenses over a specific period of time?

Statement of Cash Flows

Balance Sheet

Statement of Retained Earnings

Income Statement

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Verified step by step guidance

Understand the purpose of each accounting document: The Statement of Cash Flows shows cash inflows and outflows, the Balance Sheet provides a snapshot of assets, liabilities, and equity at a specific point in time, and the Statement of Retained Earnings tracks changes in retained earnings. The Income Statement, however, summarizes revenues and expenses over a specific period.

Recognize that the Income Statement is also referred to as the Profit and Loss Statement. It is used to calculate net income by subtracting total expenses from total revenues.

Identify the components of the Income Statement: Revenues (e.g., sales revenue, service revenue), Expenses (e.g., cost of goods sold, operating expenses), and Net Income (or Net Loss).

Understand the time frame: The Income Statement covers a specific period, such as a month, quarter, or year, unlike the Balance Sheet, which is a snapshot at a single point in time.

Conclude that the Income Statement is the correct document for showing a business’s revenues and expenses over a specific period of time, as it provides a detailed breakdown of financial performance during that period.