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 of the following characteristics of a public stock company deals with the relationship between principals and agents?

Separation of ownership and control

Double taxation

Limited life

Unlimited liability

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Understand the concept of a public stock company: A public stock company is a business entity where ownership is divided among shareholders who own stock in the company. These shareholders are considered principals, while the managers and executives who run the company are agents.

Learn about the principal-agent relationship: This relationship arises when the principals (shareholders) delegate decision-making authority to the agents (managers). The agents are expected to act in the best interest of the principals, but conflicts can occur if agents prioritize their own interests instead.

Focus on the characteristic 'Separation of ownership and control': This refers to the division between the shareholders (owners) and the managers (controllers). It is a defining feature of public stock companies and directly relates to the principal-agent relationship.

Review the other options: Double taxation refers to the taxation of corporate income at both the corporate and shareholder levels. Limited life and unlimited liability are characteristics of other business structures, such as partnerships or sole proprietorships, and are not relevant to the principal-agent relationship in public stock companies.

Conclude that 'Separation of ownership and control' is the correct characteristic that deals with the relationship between principals and agents in a public stock company.