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

Fundamental Accounting Equation

Financial Accounting

1. Introduction to Accounting

Fundamental Accounting Equation

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Multiple Choice

Transaction analysis in accounting is primarily based on which two principles?

Every transaction affects at least two accounts

Expenses are recorded only when paid

The accounting equation must remain in balance

Revenue is recognized only when cash is received

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Verified step by step guidance

Understand the concept of transaction analysis: Transaction analysis is the process of identifying the effects of a financial transaction on the accounting equation and the accounts involved.

Recall the two fundamental principles of transaction analysis: (1) Every transaction affects at least two accounts, and (2) The accounting equation (Assets = Liabilities + Equity) must remain in balance.

Analyze the first principle: Every transaction involves a dual effect on accounts, which is the basis of the double-entry accounting system. For example, if cash is received, one account (Cash) increases, and another account (Revenue or Accounts Receivable) is affected.

Analyze the second principle: The accounting equation must remain in balance after every transaction. This means that any increase or decrease in one part of the equation must be offset by a corresponding change in another part to maintain equality.

Clarify the incorrect statements: Expenses are recorded when incurred (not only when paid), and revenue is recognized when earned (not only when cash is received), following the accrual basis of accounting.