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

Net Sales

Financial Accounting

4. Merchandising Operations

Net Sales

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Multiple Choice

Net income appears on the end-of-period spreadsheet in the:

Income Statement Debit column

Balance Sheet Debit column

Income Statement Credit column and Balance Sheet Debit column

Income Statement Credit column

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Verified step by step guidance

Understand the concept of net income: Net income is the profit earned by a company after deducting all expenses, including taxes, from its total revenue. It is a key figure in financial accounting and appears in both the Income Statement and Balance Sheet.

Review the structure of the Income Statement: The Income Statement summarizes revenues and expenses. Net income is the result of subtracting total expenses from total revenues, and it is recorded in the Credit column because it increases equity (retained earnings).

Examine the Balance Sheet: The Balance Sheet shows the company's financial position, including assets, liabilities, and equity. Net income flows into the equity section as retained earnings, which is recorded in the Debit column to balance the accounting equation.

Understand the relationship between the Income Statement and Balance Sheet: Net income from the Income Statement is transferred to the Balance Sheet under retained earnings, connecting the two financial statements.

Verify the correct placement: Based on accounting principles, net income appears in the Income Statement Credit column (indicating an increase in equity) and the Balance Sheet Debit column (to balance the equation).