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 is the basis for financial management and represents the fundamental accounting equation?

Revenue = Expenses + Liabilities

Assets = Liabilities + Equity

Assets = Revenue - Expenses

Equity = Assets + Liabilities

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Verified step by step guidance

Step 1: Understand the fundamental accounting equation, which is the basis for financial management. The equation is: Assets = Liabilities + Equity.

Step 2: Analyze why this equation is fundamental. It represents the relationship between a company's resources (assets), obligations (liabilities), and ownership interest (equity).

Step 3: Compare the given options to the fundamental accounting equation. For example, 'Revenue = Expenses + Liabilities' does not align with the equation because revenue and expenses are part of the income statement, not the balance sheet.

Step 4: Evaluate the other options. 'Assets = Revenue - Expenses' is incorrect because revenue and expenses are not directly part of the balance sheet equation. Similarly, 'Equity = Assets + Liabilities' is incorrect because equity is derived by subtracting liabilities from assets.

Step 5: Conclude that the correct answer is 'Assets = Liabilities + Equity,' as it accurately represents the fundamental accounting equation used in financial management.