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

12. Which of the following best describes an account that reduces a related account on a financial statement?

Revenue account

Liability account

Asset account

Contra account

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Verified step by step guidance

Understand the concept of a contra account: A contra account is an account that reduces the balance of a related account on a financial statement. It is used to provide more detailed information about the financial position of a company.

Identify the types of accounts that can have contra accounts: Contra accounts are commonly associated with asset accounts (e.g., Accumulated Depreciation reduces the value of Property, Plant, and Equipment) and revenue accounts (e.g., Sales Returns and Allowances reduce total revenue).

Recognize the purpose of contra accounts: Contra accounts are used to track reductions or offsets to the main account, ensuring accurate reporting and transparency in financial statements.

Distinguish contra accounts from other accounts: Unlike regular accounts, contra accounts have opposite normal balances. For example, a contra asset account has a credit balance, while a regular asset account has a debit balance.

Apply the concept to the problem: The correct answer is 'Contra account' because it specifically describes an account that reduces a related account on a financial statement, as opposed to revenue, liability, or asset accounts, which do not inherently serve this purpose.