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 of the following correctly expresses the basic accounting equation?

Liabilities = Assets + Owner's Equity

Owner's Equity = Assets - Revenues

Assets = Revenues - Expenses

Assets = Liabilities + Owner's Equity

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Verified step by step guidance

Understand the basic accounting equation: The fundamental principle of accounting is that a company's resources (Assets) are financed by either borrowing (Liabilities) or by the owner's investment (Owner's Equity). This is expressed as: Assets = Liabilities + Owner's Equity.

Analyze the options provided in the problem: Review each option to determine if it aligns with the basic accounting equation.

Option 1: 'Liabilities = Assets + Owner's Equity' is incorrect because it rearranges the equation improperly. Liabilities are not the sum of Assets and Owner's Equity.

Option 2: 'Owner's Equity = Assets - Revenues' is incorrect because it misrepresents the relationship. Owner's Equity is derived from the equation: Owner's Equity = Assets - Liabilities, not involving Revenues directly.

Option 3: 'Assets = Revenues - Expenses' is incorrect because it confuses the accounting equation with the income statement formula. The correct answer is 'Assets = Liabilities + Owner's Equity,' which is the fundamental accounting equation.