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

Single-step Income Statement

Financial Accounting

4. Merchandising Operations

Single-step Income Statement

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Multiple Choice

Which financial statement shows how well a company performed over the past year?

Statement of Cash Flows

Statement of Retained Earnings

Balance Sheet

Income Statement

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Verified step by step guidance

Understand the purpose of each financial statement: The Income Statement, also known as the Profit and Loss Statement, summarizes a company's revenues and expenses over a specific period, typically a year, to show its financial performance.

Compare the Income Statement to other financial statements: The Statement of Cash Flows focuses on cash inflows and outflows, the Balance Sheet provides a snapshot of the company's financial position at a specific point in time, and the Statement of Retained Earnings shows changes in retained earnings over a period.

Recognize that the Income Statement is the only financial statement designed to measure performance over a period, as it calculates net income or loss by subtracting expenses from revenues.

Identify the key components of the Income Statement: These include revenues, cost of goods sold (COGS), gross profit, operating expenses, operating income, and net income.

Conclude that the Income Statement is the correct answer because it directly reflects how well a company performed financially over the past year by summarizing its profitability.