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

When creating the income statement, which of the following is typically reported as the final line item?

Dividends paid

Total assets

Retained earnings

Net income

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Understand the purpose of an income statement: It is a financial report that summarizes a company's revenues, expenses, and profits over a specific period. The goal is to calculate the net income, which represents the company's profitability.

Identify the structure of the income statement: The income statement typically starts with revenues (sales or income), subtracts expenses (cost of goods sold, operating expenses, taxes, etc.), and arrives at the net income as the final line item.

Clarify why net income is the final line item: Net income is the result of subtracting all expenses from total revenues. It reflects the company's earnings after all costs have been accounted for, making it the logical conclusion of the income statement.

Explain why other options are incorrect: Dividends paid are not part of the income statement; they are reported in the statement of retained earnings or cash flow statement. Total assets are part of the balance sheet, not the income statement. Retained earnings are also reported in the statement of retained earnings, not directly in the income statement.

Summarize the key takeaway: The income statement is designed to show the company's profitability, and net income is the final line item that represents this figure.