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Learn by building the statements

Accounting from zero, through 18 connected calculations.

Predict the result, calculate it, inspect the relationship and then change one input. Each stage supplies the concepts required by the next.

Start the path

The accounting loop

Transaction → ledger → statement → interpretation

  1. Identify what changed and which accounts are affected.
  2. Check that debits and credits remain equal.
  3. Carry balances into the relevant financial statement.
  4. Reconcile the statements and calculate an analytical ratio.
  5. Explain what the result can and cannot establish.

The Accounting from Zero spine

85 calculator lessons in dependency order

Progress is available to free members and is also retained locally when you are signed out.

Step 3

Build the income statement

Move from revenue through gross and operating profit to net income.

Before starting: Understand revenue, expenses and period matching.
  1. Step 3 · Lesson 1Gross profitCalculate gross profit and gross margin from revenue and cost of goods sold.
  2. Step 3 · Lesson 2Operating profitCalculate operating profit after cost of goods sold and operating expenses.
  3. Step 3 · Lesson 3Net incomeBuild a compact income statement from revenue, costs, other items, interest and tax.
  4. Step 3 · Lesson 4EBITCalculate earnings before interest and tax from revenue and operating expenses.
  5. Step 3 · Lesson 5EBITDAReconcile net income to earnings before interest, taxes, depreciation and amortisation.
  6. Step 3 · Lesson 6Operating marginMeasure operating profit as a percentage of revenue.
Step 6

Inventory and long-lived assets

Calculate cost of goods sold and allocate asset cost through depreciation.

Before starting: Understand expenses, inventory and carrying amounts.
  1. Step 6 · Lesson 1Cost of goods soldReconcile beginning inventory, purchases and ending inventory to calculate COGS.
  2. Step 6 · Lesson 2FIFO inventoryCalculate cost of goods sold and ending inventory for two purchase layers using first-in, first-out.
  3. Step 6 · Lesson 3LIFO inventoryCalculate cost of goods sold and ending inventory for two purchase layers using last-in, first-out.
  4. Step 6 · Lesson 4Weighted-average inventoryCalculate weighted-average unit cost, cost of goods sold and ending inventory for two purchase layers.
  5. Step 6 · Lesson 5Straight-line depreciationAllocate an asset's depreciable amount evenly over its useful life.
  6. Step 6 · Lesson 6Declining-balance depreciationApply a depreciation rate to an asset's opening carrying amount.
Step 7

Read the statements with ratios

Interpret collections, supplier payments, leverage and returns using consistent periods.

Before starting: Understand the income statement and balance sheet.
  1. Step 7 · Lesson 1Receivables turnoverMeasure how often average trade receivables are collected during a period.
  2. Step 7 · Lesson 2Payables turnoverMeasure how often average trade payables are paid during a period.
  3. Step 7 · Lesson 3Days sales outstandingEstimate the average number of days represented by ending receivables.
  4. Step 7 · Lesson 4Days in inventoryEstimate how many days of cost of goods sold are represented by average inventory.
  5. Step 7 · Lesson 5Debt to equityCompare total interest-bearing debt or liabilities with shareholders' equity.
  6. Step 7 · Lesson 6ROA and ROECompare net income with average assets and average shareholders' equity.
Step 8

Close and reconcile the period

Prepare common adjustments, reconcile cash and review accounting estimates before finalising statements.

Before starting: Understand double entry, accrual accounting and the main financial statements.
  1. Step 8 · Lesson 1Bank reconciliationReconcile book and bank cash balances after timing differences, fees and interest.
  2. Step 8 · Lesson 2Doubtful accounts allowanceEstimate the required receivables allowance and period-end bad-debt adjustment.
  3. Step 8 · Lesson 3Bad-debt write-offShow how an allowance-method write-off changes gross receivables and the allowance.
  4. Step 8 · Lesson 4Accrued expenseCalculate the adjusting expense and liability for costs incurred but not yet recorded.
  5. Step 8 · Lesson 5Prepaid expenseAllocate a prepaid cost across coverage months and calculate its remaining asset balance.
  6. Step 8 · Lesson 6Deferred revenueRecognise revenue in proportion to delivered obligations and calculate the remaining liability.
  7. Step 8 · Lesson 7Inventory shrinkageMeasure missing inventory units, write-down value and shrinkage percentage.
  8. Step 8 · Lesson 8Interest coverageMeasure how many times operating profit covers annual interest expense.
Step 9

Apply advanced adjustments and controls

Measure provisions, impairment, disposal, closing entries and projected control differences.

Before starting: Understand accruals, carrying amounts, estimates and the complete period-end close.
  1. Step 9 · Lesson 1Accrued revenueCalculate revenue earned but not yet billed and the resulting receivable.
  2. Step 9 · Lesson 2Payroll accrualAccrue unpaid wages and employer payroll costs at a reporting date.
  3. Step 9 · Lesson 3Warranty provisionEstimate expected warranty expense and the closing provision balance.
  4. Step 9 · Lesson 4Lower of cost and NRVCompare inventory cost with net realisable value and calculate any write-down.
  5. Step 9 · Lesson 5Asset disposalCalculate an asset's carrying amount and the gain or loss on disposal.
  6. Step 9 · Lesson 6Asset impairmentCompare carrying amount with recoverable amount and estimate an impairment loss.
  7. Step 9 · Lesson 7Lease expenseAllocate total fixed lease payments evenly across the lease term.
  8. Step 9 · Lesson 8Cash over and shortCompare counted cash with the expected register balance.
  9. Step 9 · Lesson 9Ageing allowanceEstimate expected credit losses across current, overdue and seriously overdue receivables.
  10. Step 9 · Lesson 10Margin reconciliationBridge expected gross profit to actual gross profit using sales and cost variances.
  11. Step 9 · Lesson 11Closing entriesCalculate the equity balance after closing revenue, expenses and distributions.
  12. Step 9 · Lesson 12Audit error projectionProject detected monetary error from an audit sample to the sampled population.
Step 10

Measure specialised assets, financing and equity

Apply accelerated allocation methods, inventory estimates, bond adjustments and per-share measures.

Before starting: Understand accrual accounting, carrying values, inventory, long-term debt and shareholders' equity.
  1. Step 10 · Lesson 1Double-Declining Balance DepreciationCalculate accelerated depreciation for a selected year using twice the straight-line rate.
  2. Step 10 · Lesson 2Sum-of-the-Years'-Digits DepreciationCalculate accelerated depreciation using the remaining-life fraction of the years' digit sum.
  3. Step 10 · Lesson 3Units of Production DepreciationAllocate depreciation according to the asset output consumed during a period.
  4. Step 10 · Lesson 4Intangible Asset AmortizationCalculate straight-line amortisation for a finite-lived intangible asset.
  5. Step 10 · Lesson 5Natural Resource DepletionAllocate a natural resource's depletable cost to units extracted during a period.
  6. Step 10 · Lesson 6Gross Profit Method Inventory EstimateEstimate ending inventory from goods available, sales and an expected gross-margin rate.
  7. Step 10 · Lesson 7Retail Inventory MethodEstimate ending inventory at cost using a cost-to-retail ratio.
  8. Step 10 · Lesson 8Receivables Factoring CostCalculate cash proceeds and effective short-term cost when receivables are sold to a factor.
  9. Step 10 · Lesson 9Early Payment Discount Annualized CostAnnualise the financing cost of declining a supplier early-payment discount.
  10. Step 10 · Lesson 10Accrued Interest AdjustmentCalculate interest expense and payable accrued since the previous payment date.
  11. Step 10 · Lesson 11Straight-Line Bond Premium AmortizationAllocate a bond issue premium evenly across interest periods.
  12. Step 10 · Lesson 12Straight-Line Bond Discount AmortizationAllocate a bond issue discount evenly across interest periods.
  13. Step 10 · Lesson 13Treasury Stock Cost MethodCalculate treasury-stock cost, reissue proceeds and the equity difference under the cost method.
  14. Step 10 · Lesson 14Preferred Dividends in ArrearsCalculate cumulative preferred dividends unpaid and the amount available to common shareholders.
  15. Step 10 · Lesson 15Basic Earnings per ShareCalculate income available to each weighted-average ordinary share.
  16. Step 10 · Lesson 16Book Value per ShareCalculate ordinary shareholders' recorded equity per outstanding ordinary share.
Step 11

Build account roll-forwards and job controls

Reconcile opening balances, period movements and closing balances for major operating accounts.

Before starting: Understand accruals, deferrals, inventory, fixed assets, provisions and statement presentation.
  1. Step 11 · Lesson 1Revenue Recognition Roll-ForwardReconcile opening contract revenue, additions, recognised revenue and closing unrecognised balance.
  2. Step 11 · Lesson 2Deferred Revenue Roll-ForwardCalculate closing deferred revenue from opening liability, customer billings and revenue earned.
  3. Step 11 · Lesson 3Inventory Roll-ForwardReconcile opening inventory, purchases, cost of goods sold and inventory adjustments.
  4. Step 11 · Lesson 4Fixed Asset Roll-ForwardReconcile opening net fixed assets with additions, disposals and depreciation.
  5. Step 11 · Lesson 5Lease Liability Roll-ForwardReconcile a lease liability from opening balance, interest, new leases and principal payments.
  6. Step 11 · Lesson 6Doubtful Accounts Allowance Roll-ForwardReconcile the allowance for credit losses using provisions, write-offs and recoveries.
  7. Step 11 · Lesson 7Accrued Expense Roll-ForwardReconcile accrued expenses from opening accrual, new expense recognised and cash settlements.
  8. Step 11 · Lesson 8Prepaid Expense Roll-ForwardReconcile prepaid expenses from opening asset, new prepayments and expense amortisation.
  9. Step 11 · Lesson 9Retained Earnings Roll-ForwardReconcile opening retained earnings with profit, dividends and prior-period adjustments.
  10. Step 11 · Lesson 10Work in Process Roll-ForwardReconcile work-in-process inventory from opening balance, production costs and completed goods transferred out.
  11. Step 11 · Lesson 11Job Cost VarianceCompare actual job cost with estimated cost and calculate the effect on expected gross profit.
  12. Step 11 · Lesson 12Warranty Liability Roll-ForwardReconcile an estimated warranty liability from opening reserve, new provision and claims settled.
Step 12

Reconcile receivables, payables, tax, debt and equity

Build movement schedules for contract assets, operating balances, taxes, financing, capital and customer deposits.

Before starting: Understand account classification, accrual accounting, effective interest and equity movements.
  1. Step 12 · Lesson 1Contract Asset Roll-ForwardReconcile opening contract assets with revenue recognised ahead of billing and amounts transferred to receivables.
  2. Step 12 · Lesson 2Accounts Receivable Roll-ForwardReconcile gross receivables using opening balance, credit sales, collections, write-offs and adjustments.
  3. Step 12 · Lesson 3Accounts Payable Roll-ForwardReconcile accounts payable from opening balance, credit purchases, supplier payments and adjustments.
  4. Step 12 · Lesson 4Sales Tax Payable Roll-ForwardReconcile sales tax collected, eligible input tax credits and remittances.
  5. Step 12 · Lesson 5Payroll Liability Roll-ForwardReconcile payroll liabilities from opening balance, employee withholdings, employer charges and remittances.
  6. Step 12 · Lesson 6Loan Payable Roll-ForwardReconcile loan principal from opening balance, new borrowing, principal repayments and non-cash adjustments.
  7. Step 12 · Lesson 7Bond Carrying Value Roll-ForwardReconcile a bond liability using opening carrying value, effective interest, cash coupon and repayments.
  8. Step 12 · Lesson 8Deferred Tax Balance Roll-ForwardReconcile a net deferred tax balance using opening amount, profit-or-loss movement and equity movement.
  9. Step 12 · Lesson 9Current Tax Payable Roll-ForwardReconcile current income tax payable from opening balance, current tax expense, payments and credits.
  10. Step 12 · Lesson 10Capital Contributions Roll-ForwardReconcile contributed capital from opening balance, new issues, issue costs and capital reductions.
  11. Step 12 · Lesson 11Dividends Payable Roll-ForwardReconcile declared but unpaid dividends from opening balance, new declarations and cash payments.
  12. Step 12 · Lesson 12Customer Deposit Liability Roll-ForwardReconcile refundable customer deposits from opening liability, receipts, refunds and amounts applied.

Clear answers

Learning accounting with calculators

Do I need accounting experience?

No. Step 1 starts with the accounting equation, and each later stage states what should be understood first.

How is progress saved?

Progress is saved locally for everyone. A free member account can synchronise completed lessons across devices.

Will this make me a qualified accountant?

No. It builds practical foundations and calculation fluency; professional work also requires the applicable standards, law, judgement and review.

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