What you'll learn

Explain the format of the income statement and balance sheet
Define various financial statement terms (e.g. accounts receivable, prepayments, etc.)
Record financial statement transactions (e.g. invoicing, raising equity, buying inventory, etc.)
Prepare a simple income statement and balance sheet
Outline the format of the cash flow statement
Explain the difference between profit and cash
Prepare a simple cash flow statement using the balance sheet and income statement

Course content

4 sections • 67 lectures • 1h 9m total length

Introduction1:26
Explain the formats of the balance sheet, income statement, and cash flow statement; show how to record transactions and prepare these statements from those transactions.
Downloadable Files0:01
Session Objectives0:27
The Three Key Financial Statements1:27
The Balance Sheet: Assets1:32
The Balance Sheet: Liabilities1:23
Explore current and non-current liabilities on the balance sheet, including accounts payable, terms of 30 to 90 days, and how to total all liabilities to reach the total liabilities figure.
The Balance Sheet: Shareholders' Equity1:25
Balancing The Balance Sheet1:35
Recording Transactions0:53
Issuing Shares For 100 in Cash0:47
Taking Out a Four Year Bank Loan0:43
Buying a Property For 800:43
Buying Inventory For 600:40
The company records a cash outflow of 60 to buy inventory, with an offsetting 60 increase in inventory. Total assets stay 150, equal to liabilities and equity.
Selling All Inventory For 901:39
Paying Salaries of 200:41
Paying Interest of 30:42
Current Assets Quiz
Defining Accounts Receivable and Payable1:24
Buying and Selling on Credit1:28
Valdero Inc. Exercise0:18
Balance Sheet Quiz

Session Objectives0:31
Role of the Income Statement0:47
Income Statement: Gross Profit1:07
Income Statement: Operating Income0:51
Income Statement: Net Income0:38
Creating a Full Income Statement1:41
Create a full income statement from the balance sheet, calculating revenues, cost of sales, gross profit, operating expenses, operating profit, interest, taxes, and net profit that flows into retained earnings.
Recording Income and Expenses0:36
Prepayments1:21
Recording Expenses Part 20:21
Accrued Expenses0:49
Finance Term Quiz
Luton Inc. Exercise0:18
Depreciation0:58
The Impact of Depreciation2:16
Jenga Inc. Exercise0:18
Practice what we've covered by completing the Jenga Inc. exercise, follow its instructions, and review the solutions in the Jenga Inc. solution file.
Quiz

Session Objectives0:35
Downloadable Files0:01
Three Key Financial Statements Review0:53
The Role of Cash Flow Statement0:35
The Cash Flow Statement: Operating Cash Flows1:01
The Cash Flow Statement: Investing Cash Flows0:42
The Cash Flow Statement: Financing Cash Flows0:42
Profit vs. Cash Flow0:47
Explore why profits and cash flow differ, and how accrual accounting recognizes revenues when earned and expenses when incurred, with the cash flow statement recording cash receipts and payments only.
The Idea of Matching Over Time0:38
Matching Over Time Solution0:42
Compare cash flow basis and matching principle basis by spreading a $4,000 travel cost over five days to $8 per day, highlighting planning daily costs versus cash inflows.
PP&E Depreciation Recap0:59
Explore how property, plant and equipment and depreciation affect cash flow, income, and balance sheets through a truck purchase case with straight-line depreciation and a full first-year depreciation.
Depreciation and the Three Financial Statements1:35
Different Types of Depreciation Methods2:53
Compare straight-line, double declining balance, and units of production depreciation methods, showing how each method calculates depreciation and how expenses relate to asset use and production.
Calculating Operating Cash Flows - Direct Method0:44
Explore operating cash flows in the cash flow statement and why the direct approach, while straightforward, is rarely used because tracking every cash inflow and outflow is impractical.
The Indirect Method1:28
Operating Cash Flows - Indirect Method1:05
Operating Cash Flows Example Period 10:46
Period 1 Solution2:08
Operating Cash Flows Example Period 20:37
Period 2 Solution3:15
Operating Cash Flows Example Period 30:47
Period 3 Solution5:15
Operating Cash Flows Quiz
Johannes Operating Cash Flow Exercise0:17
Deriving the Complete Cash Flow Statement0:50
Stage One - Compare the Balance Sheets0:43
Comparing Assets and Liabilities1:17
Analyze how rising accounts receivable and inventory drain cash flow, while higher accounts payable improves cash flow, highlighting the interplay between assets and liabilities in the balance sheet.
Stage Two - Classifying the Cash Flows0:34
Classify changes in accounts receivable, accounts payable, and inventories into operating, investing, or financing cash flows on the cash flow statement.
Classifying Working Capital Cash Flows0:27
Classify ABC Incs cash flows from accounts receivable, accounts payable, and inventories under operating activities, and compute cash flow from operations totaling 28 with net income 8 and depreciation 90.
Dealing With Property, Plant and Equipment (PP&E)0:49
Calculating Net Capital Expenditures (Capex)1:23
Calculate net capex from opening and closing PPE and depreciation, using the formula closing PPE = opening PPE + net capex − depreciation, and record the outflow as investing activities.
Net Capital Expenditure Quiz
Dealing With Retained Earnings0:52
Preparing a Cash Flow Statement Exercise0:21
practice two cash flow statement exercises—cash flow exercise and canned or cash flow exercise—by working through them independently and then checking solutions in the attached files.
Quiz
Conclusion1:25

Requirements

No prerequisite knowledge is required!
Access to a PC or Mac
An Internet connection, including the ability to play audio as courses include voice lectures
Familiarity with basic Internet applications (email and web browser)
A recent version of Microsoft Internet Explorer, Firefox, Chrome, Safari or another web browser
An updated version of Microsoft Excel

Description

Introduction to Accounting course overview:

This FREE Introduction to Accounting course will guide you through the fundamentals of the accounting process. We will explore the layout of the balance sheet, income statement, and cash flow statement; and demonstrate how to prepare financial statements from scratch. This fundamental accounting course is an essential building block required for performing financial modeling and other types of Wall Street financial analysis.

Constructing an income statement and balance sheet

In the first section of this free accounting course, we will explore the layout of the balance sheet and income statement, how transactions are recorded, and how to prepare a simple balance sheet and income statement. By the end of this section, you will have a solid understanding of how to construct a balance sheet and income statement.

Explain the format of the income statement and balance sheet
Define various financial statement terms (e.g. accounts receivable, prepayments, etc.)
Record financial statement transactions (e.g. invoicing, raising equity, buying inventory, etc.)
Prepare a simple income statement and balance sheet

Constructing a cash flow statement

In this second section of this Intro to Accounting course, we will explore the layout of the cash flow statement, explain the differences between the cash flow statement and the income statement, and prepare a cash flow statement from scratch. By the end of this section, you will have a solid understanding of how to construct a cash flow statement.

Outline the format of the cash flow statement
Explain the difference between profit and cash
Prepare a simple cash flow statement using the balance sheet and income statement

More Accounting Course Details

This online accounting course incorporates a wide range of applied exercises and case studies. Sophisticated search and navigation tools allow you to go at your own pace while quizzes test what you’ve just learned.

The course also includes two PDF reference guides – an accounting factsheet and a financial statements glossary - that can be used while taking the course and downloaded to your computer for future reference. This is the ultimate accounting crash course to prep for Wall Street careers!

Who this course is for:

This free online accounting course is designed for anyone who wants to review the fundamentals and building blocks of the accounting process.
This class will also be useful for professionals who work in finance and want to review the concepts required for financial modeling and valuation in CFI's later courses.

What you'll learn

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Course content

Constructing a Balance Sheet19 lectures • 19min

Constructing an Income Statement14 lectures • 13min

Constructing a Cash Flow Statement33 lectures • 37min

Additional Resources1 lecture • 1min

Requirements

Description

Who this course is for: