Table of contents

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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

6. Internal Controls and Reporting Cash

Fraud and the Fraud Triangle

Financial Accounting

6. Internal Controls and Reporting Cash

Fraud and the Fraud Triangle

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Multiple Choice

What was the primary danger of Americans buying stocks on margin during the 1920s?

Investors could lose more money than they initially invested if stock prices fell.

It guaranteed investors would always make a profit.

It eliminated the need for collateral in stock purchases.

It prevented banks from lending money to businesses.

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Verified step by step guidance

Understand the concept of buying stocks on margin: Buying on margin means investors borrow money from a broker to purchase stocks, using the stocks themselves as collateral.

Recognize the risk involved: If stock prices fall, the value of the collateral decreases, and investors may be required to repay the borrowed amount or provide additional funds to cover the loss.

Analyze the potential consequences: Investors could lose more money than they initially invested because they are responsible for repaying the borrowed funds regardless of the stock's performance.

Clarify why the other options are incorrect: Buying on margin does not guarantee profits, does not eliminate the need for collateral, and does not prevent banks from lending money to businesses.

Conclude the primary danger: The main risk of buying stocks on margin during the 1920s was the possibility of losing more money than the initial investment if stock prices fell.