Financial Accounting Foundations

What do you think when you hear the term accounting? Lots of people get excited, people like us, ...

The most fundamental type of accounting is bookkeeping. Just the routine, systematic gathering of...

The balance sheet is built around one of the most awesome creations of the human mind, the accoun...

  1. If you buy a car and pay 10 percent of the cost in cash, and take out a loan for the remain...

Let's define the items found in the financial statements. The first primary financial statement i...

A balance sheet is a listing of a company's valuable resources, its assets, paired with a list of...

The income statement contains two items, revenues and expenses. Revenues minus expenses equals ne...

The statement of cash flows or cash flow statement is the report of the amount of cash collected ...

1. When creating a statement of cash flows, where would you put the cash used to pay employee w...

The financial statements are the cap stone of a careful bookkeeping process. The key to properly ...

The debit and credit system can be summarized in two basic rules. Increases in assets are written...

Journal entries summarize the accounts involved in a transaction, whether those accounts increase...

Once all journal entries are made and organized, a year-end balance for each account can be compu...

1. With debits and credits, which category will increase with a credit? expenses inventory ...

Imagine a company that compensates a key employee with first, a cash salary of $80,000. Second, a...

When does a sale get reported in the books? Let's use a real company example to illustrate the su...

Long-term assets such as buildings and equipment are reported in the balance sheet at their histo...

From 1976 through 2018, the accounting for leases was among the most deceptive accounting practic...

For large companies, the most commonly discussed net income number is earnings per share, affecti...

It is often the case that one company will store its temporary excess cash by investing in the st...

Corporations pay income taxes just like individuals do. It's reported as the final expense in the...

For a retail company, the most important expense on the income statement is cost of goods sold. H...

What is the difference between basic earnings per share and diluted earnings per share (EPS)?...

The culmination of the accounting process is the production of the financial statements. And then...

In fiscal 2018, Walmart's net income was $7.17 billion. In that same fiscal 2018 Target's net inc...

The DuPont Framework is a tool to decompose a company's return on equity into three dimensions, p...

The benefit of financial leverage is that using borrowed money allows a company to be larger with...

A company's operating cycle is the length of time from when the company buys its inventory until ...

Market prices incorporate all kinds of information. For example, the market prices for firms in a...

Which portion of the DuPont framework shows the amount of sales generated from each dollar of...

You now know about financial statements, the accounting process, important financial accounting t...