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

Useful Information

Financial Accounting

1. Introduction to Accounting

Useful Information

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Multiple Choice

It is most important to account for factors like warranties and durability when purchasing a:

Prepaid expense

Fixed asset

Inventory item

Short-term investment

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Verified step by step guidance

Understand the concept of fixed assets: Fixed assets are long-term tangible assets used in the operations of a business, such as machinery, buildings, or vehicles. These assets are expected to provide benefits over multiple accounting periods.

Recognize the importance of warranties and durability: When purchasing fixed assets, factors like warranties and durability are crucial because they impact the asset's useful life, maintenance costs, and overall value to the business.

Differentiate between the options: Prepaid expenses are payments made in advance for goods or services, inventory items are goods held for sale, and short-term investments are financial instruments held for a short duration. None of these require consideration of warranties and durability in the same way fixed assets do.

Relate warranties and durability to fixed assets: Fixed assets often come with warranties to ensure their functionality and durability over time. These factors help businesses estimate depreciation and plan for replacements or repairs.

Conclude why fixed assets are the correct answer: Fixed assets are the only category among the options where warranties and durability are critical factors in the purchasing decision, as they directly affect the asset's long-term usability and financial impact.