Exam (elaborations)

ACCOUNTING CRASH COURSE EXAM V4 LATEST UPDATE |WALL STREET EXAM REVIEW|BRAND NEW EXAM QUESTIONS AND CORRECT ANSWERSALL GRADED A+|GUARANTEED SUCCESS|

0 purchase

Course
ACCOUNTING CRASH COURSE

Institution
ACCOUNTING CRASH COURSE

ACCOUNTING CRASH COURSE EXAM V4 LATEST UPDATE |WALL STREET EXAM REVIEW|BRAND NEW EXAM QUESTIONS AND CORRECT ANSWERS ALL GRADED A+|GUARANTEED SUCCESS| Income statement & why its important - ANSWER-financial report that depicts the operating performance of a company over a specific period ...

[Show more]

Preview 3 out of 27 pages

View example

Uploaded on October 8, 2024
Number of pages 27
Written in 2024/2025
Type Exam (elaborations)
Contains Questions & answers

Institution ACCOUNTING CRASH COURSE
Course ACCOUNTING CRASH COURSE

BRILLIANTSOLUTIONS Member since 1 year 17 documents sold

$12.49

Add to cart

Add to wishlist

100% satisfaction guarantee
Immediately available after payment
Both online and in PDF
No strings attached

ACCOUNTING CRASH COURSE EXAM
V4LATEST UPDATE 2024-
2025|WALL STREET EXAM
REVIEW|BRAND NEW EXAM
QUESTIONS AND CORRECT
ANSWERSALL GRADED
A+|GUARANTEED SUCCESS|

Income statement & why its important - ANSWER-✅financial report that depicts the
operating performance of a company over a specific period of time

Its important because it facilitates the analysis of a company's growth prospects,
cost structure and profitability
Analysts an use the IS to identify the components and sources (drivers) of net
earnings

****also referred to as consolidated statement of earnings, the profits and loss
statement, statement of revenues and expenses

Revenue (top line on IS) - ANSWER-✅Revenue represents proceeds from the sale of
goods and services produced or offered by a company; revenue is referred to
company top line.

A company can have other income not tied to core operations (income for legal
settlements, cash collected, etc)

Accrual basis is revenue must be recorded only when it is earned and measurable -
ANSWER-✅According to the revenue recognition principle, a company cannot
record revenue until it is earned -- that is, until that order is shipped to a customer
and collection from that customer, who used a CC, is reasonably assured

, Revenue Recognition Method 1: Multiple deliverables - ANSWER-✅Fo sales of
bundles products, companies should assign individual values to each of the bundled
components → this is especially relevant in the software industry

ex: apple selling iphone that has price of hardware + software rights --> recognize
revenue of hardware immediately, but recognize software revenue evenly over
several yrs

Revenue Recognition Method 2: Long-term projects - ANSWER-✅Multiple methods:

1: percentage of completion method: revenues are recognized on the basis of the %
of total work completed during the accounting period (eg Boeing plan example)
2: completed contract method: rarely used in US, this method allows for revenue
recognition only once the entire project has been completed

Recall matching principle in relation to revenue and expense recognition - ANSWER-
✅States that expenses should be matched to revenues

Revenues are recognized and recorded when an economic exchange occurs, while
expenses are recognized when the associated revenues are recognized, not
necessarily when cash is exchanged

Accrual vs cash accounting - ANSWER-✅Cash accounting objectively recognizes
revenues when cash is received and records costs when cash is paid out; accrual
accounting involves subjectivity in regards to the allocation of revenues and
expenses to different periods

Cash accounting is not allowed under GAAP, but for tax reporting certain businesses
are allowed to use cash basis

Non operating vs operating income and expenses on the IS - ANSWER-✅operating:
income and expenses generated and incurred from a company's core operations

nonoperating: income and expenses that are not tied to core operations of business

Everything below operating profit (income) is not directly related to operations of
the business; everything above is tied to core ops

Cost of Goods Sold (COGS)/Cost of Sales (line item on IS) - ANSWER-✅represents a
company's DIRECT cost of manufacture (for manufacturers) or procurement (for
merchandisers) of a good or service that the company sells to GENERATE REVENUE

COGS is a direct operating costs

Examples and nonexamples of COGS - ANSWER-✅Example of COGS: merchandise
inventory, raw material costs, direct labor costs, factory overhead), shipping and

, delivery costs, any other costs directly associated with the generation of revenue,
depreciation of fixed assets

Costs such as corporate overhead, marketing and admin expenses, R&D, and salaries
of employees NOT directly associated with manufacture or procurement of a good or
service are not included in COGS
These costs are included under Selling, General & Administrative (SG&A) or other
line items

Gross Profit (line item on IS) - ANSWER-✅Net Revenues - COGS

Represents profit after only direct expenses (COGS) has been accounted for

SG&A (line item on IS) - ANSWER-✅SG&A represents the operating expenses not
directly associated with the production/manufacturing or procurement of the
product or service that the company sells to generate revenue

Examples include: store lease expense for a retail business, salaries, legal expenses,
marketing and advertising expenses

Depreciation + where it is on Income statement/impact - ANSWER-✅quantifies the
wear and tear of the physical asset (most types of tangible assets) through a
systemic decrease (depreciation) of the assets' book (historical) value

****LAND is considered a fixed asset but is NOT depreciated (land never really
affects the income statement)

Where: It is NOT a line item on IS; rather it is included within COGS or SG&A.
Impact: is non-cash expense and can make up significant portion of total expenses
on company's IS --> adds to justification that IS is poor tool for tracking company
cash position.
Depr. reduces IS profits every year

Research and Development (R&D) + location on IS - ANSWER-✅expenses that stem
from company activities that are directed at developing new products or procedures

R&D expenses include compensation for employees, equipment and facilities
engaged in the R&D process

it may be a seperate line item if a large expense (ie for health care, energy, tech) or
just aggregated with SG&A

straight-line depreciation method - ANSWER-✅annual depreciation expense =
original cost - salvage value / useful life (total yrs asset expected to remain in service)

method that depreciate assets evenly over their useful lives, and this approach is
called the "straight-line method"

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller BRILLIANTSOLUTIONS. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for $12.49. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

69411 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 15 years now

Start selling

Exam (elaborations)

ACCOUNTING CRASH COURSE EXAM V4 LATEST UPDATE |WALL STREET EXAM REVIEW|BRAND NEW EXAM QUESTIONS AND CORRECT ANSWERSALL GRADED A+|GUARANTEED SUCCESS|

Document information

Subjects

Written for

Seller

Reviews received

Content preview