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

Which two accounting rules explain how increases in account balances are recorded in the fundamental accounting equation?

Assets and Liabilities both increase with debits.

Liabilities and Equity increase with debits; Assets increase with credits.

Assets increase with credits; Equity increases with debits.

Assets increase with debits; Liabilities and Equity increase with credits.

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Verified step by step guidance

Understand the fundamental accounting equation: Assets = Liabilities + Equity. This equation forms the basis of double-entry accounting.

Learn the rules of debits and credits: In accounting, debits and credits are used to record changes in account balances. Debits increase asset accounts, while credits increase liability and equity accounts.

Analyze the relationship between account types and their increases: Assets increase with debits because they represent resources owned by the business. Liabilities and equity increase with credits because they represent claims against those resources.

Review the correct answer provided: 'Assets increase with debits; Liabilities and Equity increase with credits.' This aligns with the rules of debits and credits in the fundamental accounting equation.

Apply this knowledge to practical scenarios: When recording transactions, ensure that increases in assets are recorded as debits, and increases in liabilities or equity are recorded as credits, maintaining the balance of the accounting equation.