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

Based on the human life value approach, which of the following is NOT used to calculate the fundamental accounting equation?

Liabilities

Future earning potential of an individual

Owner's Equity

Assets

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Verified step by step guidance

Understand the fundamental accounting equation: Assets = Liabilities + Owner's Equity. This equation is the foundation of financial accounting and represents the relationship between a company's resources (assets), obligations (liabilities), and ownership interest (owner's equity).

Recognize that the human life value approach is unrelated to the fundamental accounting equation. The human life value approach is used in insurance and financial planning to estimate the economic value of an individual's future earning potential, not for calculating accounting equations.

Identify the components of the fundamental accounting equation: Assets, Liabilities, and Owner's Equity. These are the only elements used in the equation, and they are derived from a company's financial statements.

Clarify that 'Future earning potential of an individual' is not a component of the fundamental accounting equation. It is a concept used in personal financial planning and does not appear in the calculation of Assets, Liabilities, or Owner's Equity.

Conclude that the correct answer to the question is 'Future earning potential of an individual,' as it is not relevant to the fundamental accounting equation.