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

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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Multiple Choice

Which of the following best describes the primary difference between financing activities and investing activities in accounting?

Financing activities relate to day-to-day operations, while investing activities relate to short-term investments.

Financing activities include the purchase of equipment, while investing activities include issuing shares of stock.

Financing activities are only recorded on the income statement, while investing activities are only recorded on the balance sheet.

Financing activities involve transactions with owners and creditors to obtain or repay capital, while investing activities involve the purchase and sale of long-term assets.

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Verified step by step guidance

Step 1: Understand the definitions of financing activities and investing activities. Financing activities involve transactions with owners and creditors to obtain or repay capital, such as issuing shares, borrowing funds, or repaying loans. Investing activities involve the purchase and sale of long-term assets, such as property, equipment, or investments.

Step 2: Analyze the options provided in the question. Each option describes a potential difference between financing and investing activities. Compare these descriptions to the definitions provided in Step 1.

Step 3: Eliminate incorrect options based on the definitions. For example, financing activities do not relate to day-to-day operations (this is part of operating activities), and investing activities do not include issuing shares of stock (this is a financing activity).

Step 4: Focus on the correct option. The correct answer states that financing activities involve transactions with owners and creditors to obtain or repay capital, while investing activities involve the purchase and sale of long-term assets. This aligns with the definitions provided.

Step 5: Confirm your understanding by reviewing the distinction between financing and investing activities. Financing activities impact the equity and liabilities section of the balance sheet, while investing activities impact the assets section. This reinforces the correct answer.