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 primarily uses financial ratios to analyze a company's performance for external stakeholders?

Managerial accounting

Tax accounting

Cost accounting

Financial accounting

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Verified step by step guidance

Understand the purpose of financial accounting: Financial accounting is primarily concerned with providing financial information to external stakeholders, such as investors, creditors, and regulatory agencies. It focuses on preparing financial statements and analyzing a company's performance using financial ratios.

Review the role of financial ratios: Financial ratios are tools used in financial accounting to evaluate a company's financial health, profitability, liquidity, and efficiency. These ratios are derived from the financial statements, such as the balance sheet, income statement, and cash flow statement.

Differentiate between the types of accounting: Managerial accounting focuses on internal decision-making and operational planning, tax accounting deals with compliance and tax-related matters, and cost accounting is concerned with analyzing costs for internal purposes. Financial accounting, on the other hand, is designed for external reporting and analysis.

Recognize the stakeholders: External stakeholders, such as shareholders, creditors, and regulatory bodies, rely on financial accounting to make informed decisions about the company. Financial ratios are a key component of this analysis.

Conclude why financial accounting is the correct answer: Since financial accounting is specifically designed to provide information to external stakeholders and uses financial ratios for performance analysis, it is the correct answer to the question.