Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

The Financial Statements

Financial Accounting

1. Introduction to Accounting

The Financial Statements

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Multiple Choice

Which fundamental accounting concept is primarily illustrated by the information presented on the balance sheet?

The revenue recognition principle

The accounting equation: Assets = Liabilities + Equity

The matching principle

The periodicity assumption

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Verified step by step guidance

Step 1: Understand the purpose of the balance sheet. The balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time. It lists assets, liabilities, and equity, illustrating the company's financial structure.

Step 2: Recall the fundamental accounting equation: Assets = Liabilities + Equity. This equation is the foundation of the balance sheet and ensures that the financial position is balanced. It represents the relationship between what the company owns (assets), owes (liabilities), and the residual interest of the owners (equity).

Step 3: Analyze the options provided in the question. The revenue recognition principle relates to when revenue is recognized in the income statement, not the balance sheet. The matching principle pertains to expenses and revenues in the income statement, and the periodicity assumption refers to dividing financial reporting into specific time periods.

Step 4: Identify the correct concept that aligns with the balance sheet. Since the balance sheet is structured based on the accounting equation (Assets = Liabilities + Equity), this concept is the one primarily illustrated by the balance sheet.

Step 5: Conclude that the accounting equation is the fundamental concept demonstrated by the balance sheet, as it ensures the financial position is accurately represented and balanced.