Basics of Accounting

Explore the building blocks of financial statements: t accounts and the general ledger. Learn double-entry bookkeeping, with debits and credits affecting assets, liabilities, and equity through cash and inventory.

The general ledger is a central repository for accounting data from subledgers such as cash, inventory, accounts payable, and accounts receivable, recording transactions to build year-end balances.

Explore a Walmart 2020 annual report to understand how a listed company presents financial highlights, corporate governance, form 10-k disclosures, and regulatory information, including board, management, and auditors.

Explore consolidated income statements, balance sheets, and cash flow statements; learn how revenue and expenses, assets and liabilities, and equity are reported under accounting standards.

Explore the core principles of recognition, measurement, valuation, and disclosure, focusing on receivables; classify them as current or non-current and as trade or non-trade, with notes and dividends as examples.

Explore accounts receivable and cash discounts, such as 2/30 net 90, and calculate the effective discount rate to decide whether early payment saves costs compared with financing costs.

Explain how to value and recognize trade receivables using the Ross method and net method, and determine net realizable value with allowances for doubtful accounts.

Aging of accounts receivable bucketizes past-due payments to 0–30, 31–63, and beyond, guiding write-offs or factoring decisions. Factoring can be with or without recourse, affecting cash now vs future recoveries.

Learn how to value inventory using identification, weighted average, FIFO, and LIFO, with practical examples from manufacturing and continuous production illustrating cost flow under changing prices.

Explore how FIFO, LIFO, and weighted average inventory methods affect cost of goods sold and inventory under rising, falling, or seasonal prices, with case examples and the concept of reserves.

Learn how inventory valuation links beginning inventory, purchases, usage, and ending inventory or cost of goods sold using FIFO, LIFO, or weighted average, plus related ownership transfer and cost components.

Explore inventory cost recording under perpetual and periodic systems, including batch and continuous production, and the lower of cost or market valuation with net realizable value and COGS.

Explore financial investments, including shares and fixed income, and learn three fair value measurement approaches: market, cost, and income, and how discount rates affect present value.

Explore the three investment classifications held to maturity, available for sale, and trading securities, and learn how holding intent, valuation methods, and income effects shape on-balance-sheet reporting and profit or loss.

Ownership percent defines investment classification: passive under 20%, significant 20–50%, and controlling over 50%. Apply cost method for under 20%, and equity or market approaches for significant or controlling interests.

Depreciation and amortization allocate upfront capital expenditures over an asset's useful life as non-cash charges, smoothing profits, with depreciation for physical assets and amortization for intangibles.

Explain useful life, salvage value, and the difference between depreciation and amortization for physical and intangible assets, with straight-line depreciation and time value of money implications.

Examine the three depreciation methods—activity based, straight line, and accelerated—and allocate depreciation based on actual usage, an accounting adjustment with no cash impact, illustrated with a tool and units produced.

Compare income statement and cash flow statement insights on revenue, expenses, and taxes. Explain depreciation methods—activity-based and straight-line—and how depreciable base, salvage value, and installation costs affect annual depreciation.

Accelerated depreciation extends straight-line depreciation by front-loading charges, illustrated by a $10,000 car and a depreciation schedule using the sum of n plus n minus one method.

Explore declining balance depreciation, including 200% and 150% methods, compare with straight-line, and learn how Macrs standardizes asset life for tax calculations.

explains depreciation methods and the effect of selling a vehicle on book value, shows how impairment and revaluation affect asset value, and introduces non-operating income from disposal.

Explore how intangible assets such as marketing intangibles, licenses, and customer data are recognized, revalued and amortized, with focus on goodwill, impairment, and acquisition synergy.

Explore how depreciation methods differ between reporting and tax purposes, creating deferred tax assets or liabilities, and how this affects taxable income and effective tax rate.

Learn the three lease types—short term, operating, and financing—and how control, duration, and transfer of ownership drive their accounting, including right-of-use assets and lease liabilities.

Explore the balance sheet with assets, liabilities, and equity, and explain how equity owners claim residual value, plus common and preferred stock, dividends—cumulative or non-cumulative—and buybacks and treasury stock.

Learn how profits translate into dividends or retained earnings, and examine stock dividends, splits, options, rights, and warrants, plus face value versus market value in equity.

Learn how cash and accrual accounting recognize revenues and expenses, guided by IFRS. View transfer of control, contracts, and performance obligations, and apply the matching principle with depreciation and exceptions.

Learn how to apply the percentage of completion and output methods for long-term contracts, matching revenue and expenses across multiple years.