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 transactions affects owner's equity?

The business purchases equipment with cash

The business pays off an accounts payable

Owner invests additional cash into the business

The business borrows money from a bank

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Verified step by step guidance

Step 1: Understand the concept of owner's equity. Owner's equity represents the owner's residual interest in the business after liabilities are subtracted from assets. It is affected by transactions such as investments by the owner, withdrawals by the owner, and the net income or loss of the business.

Step 2: Analyze the first transaction: 'The business purchases equipment with cash.' This transaction involves exchanging one asset (cash) for another asset (equipment). Since there is no change in the total assets or liabilities, owner's equity is not affected.

Step 3: Analyze the second transaction: 'The business pays off an accounts payable.' This transaction reduces a liability (accounts payable) and reduces an asset (cash). Since there is no direct impact on owner's equity, it remains unaffected.

Step 4: Analyze the third transaction: 'Owner invests additional cash into the business.' This transaction increases both the assets (cash) and owner's equity because the owner is contributing additional resources to the business. This directly affects owner's equity by increasing it.

Step 5: Analyze the fourth transaction: 'The business borrows money from a bank.' This transaction increases both assets (cash) and liabilities (loan payable). Since there is no direct impact on owner's equity, it remains unaffected.