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

To develop a standard or benchmark in accounting, firms need to start with which of the following?

The income statement

The trial balance

The fundamental accounting equation: \( \text{Assets} = \text{Liabilities} + \text{Equity} \)

The statement of cash flows

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Verified step by step guidance

Understand the purpose of a benchmark in accounting: A benchmark is used to measure and compare financial performance or position. It serves as a standard for evaluating the firm's financial health.

Recognize the importance of the fundamental accounting equation: The equation \( \text{Assets} = \text{Liabilities} + \text{Equity} \) is the foundation of accounting and represents the relationship between a firm's resources, obligations, and ownership interest.

Analyze why the fundamental accounting equation is the starting point: This equation ensures that all financial transactions are accurately recorded and balanced, forming the basis for preparing financial statements such as the income statement, trial balance, and statement of cash flows.

Connect the fundamental accounting equation to financial statements: The equation is reflected in the balance sheet, which provides a snapshot of the firm's financial position. It also influences other financial statements by ensuring consistency and accuracy in reporting.

Apply the fundamental accounting equation to develop benchmarks: Firms use this equation to establish standards for financial ratios, performance metrics, and comparisons across periods or with industry peers.