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

Cash in a bank savings account is a good example of a(n):

long-term liability

owner's equity

revenue

current asset

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Verified step by step guidance

Understand the definition of a current asset: A current asset is any asset that is expected to be converted into cash, sold, or consumed within one year or within the operating cycle of the business, whichever is longer.

Recognize that cash in a bank savings account is highly liquid, meaning it can be readily accessed and used to meet short-term obligations.

Compare the other options: Long-term liabilities represent debts or obligations due after one year, owner's equity represents the residual interest in the assets of the entity after deducting liabilities, and revenue represents income earned from business operations. None of these categories fit the nature of cash in a savings account.

Classify cash in a bank savings account as a current asset because it is readily available for use and meets the criteria of being convertible to cash within a short period.

Conclude that the correct classification for cash in a bank savings account is a current asset, as it aligns with the definition and characteristics of this category.