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

Useful Information

Financial Accounting

1. Introduction to Accounting

Useful Information

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Multiple Choice

When calculating the percentages for each budget category, which income figure should you use?

Pre-tax (gross) income

Only investment income

Total household assets

After-tax (net) income

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Verified step by step guidance

Understand the concept of after-tax (net) income: This is the income remaining after all taxes have been deducted from gross income. It represents the actual amount available for spending or saving.

Identify why after-tax (net) income is used for budgeting: Since budgeting involves allocating funds for expenses and savings, it is crucial to use the income figure that reflects the money you truly have available, which is after-tax income.

Clarify why pre-tax (gross) income is not appropriate: Gross income includes earnings before taxes and deductions, which does not accurately represent the funds available for budgeting purposes.

Explain why investment income and total household assets are not suitable: Investment income is a specific type of income and may not represent the full financial picture, while total household assets include non-liquid items like property and savings, which are not directly usable for monthly budgeting.

Conclude that after-tax (net) income is the correct figure to use for calculating percentages for each budget category, as it provides a realistic view of available funds for allocation.