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

Business Organization

Financial Accounting

1. Introduction to Accounting

Business Organization

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Multiple Choice

Which of the following is a major downside for a business to own its own building?

Reduced liquidity due to capital being tied up in real estate

Lower long-term costs compared to leasing

No responsibility for property maintenance

Increased flexibility to relocate quickly

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Verified step by step guidance

Understand the concept of liquidity: Liquidity refers to how easily a business can convert its assets into cash to meet short-term obligations. Owning a building ties up capital in real estate, which is less liquid compared to cash or other liquid assets.

Analyze the financial implications of owning a building: When a business owns its building, it incurs significant upfront costs and ongoing expenses, such as property taxes, insurance, and maintenance. These costs reduce the availability of cash for other business needs.

Compare owning versus leasing: Leasing a property typically involves lower upfront costs and provides flexibility to relocate. Owning a building, on the other hand, ties up capital and reduces the ability to adapt quickly to changing business needs.

Evaluate property maintenance responsibilities: Owning a building means the business is responsible for all property maintenance, repairs, and upgrades. This is a significant ongoing cost and effort, contrary to the option listed as 'No responsibility for property maintenance.'

Consider the flexibility to relocate: Owning a building reduces flexibility to relocate quickly, as selling or renting out the property can take time and effort. Leasing provides more agility in adapting to changing business locations or needs.