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

Which type of accounting is most relevant for disability income plans that require the insurer to match premium income with expected benefit payments over time?

Cash-basis accounting

Tax accounting

Accrual accounting

Managerial accounting

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Verified step by step guidance

Understand the concept of accrual accounting: Accrual accounting is a method where revenues and expenses are recorded when they are earned or incurred, regardless of when cash is received or paid. This is particularly useful for matching income and expenses over time.

Analyze the requirements of disability income plans: These plans require insurers to match premium income (revenue) with expected benefit payments (expenses) over time, ensuring that financial statements accurately reflect the financial position and performance.

Compare accrual accounting with other methods: Cash-basis accounting records transactions only when cash is exchanged, which may not align income and expenses over time. Tax accounting focuses on compliance with tax laws, and managerial accounting is used for internal decision-making rather than external reporting.

Determine why accrual accounting is most relevant: Accrual accounting allows insurers to recognize premium income as it is earned and match it with the expected benefit payments, providing a clear and accurate representation of financial obligations and resources over time.

Conclude that accrual accounting is the correct choice: It ensures that the financial statements reflect the true financial position of the insurer by aligning income and expenses in the same reporting period, which is essential for disability income plans.