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

When a corporation is sued and loses its case, what is the financial impact on the owners (shareholders)?

Owners must pay the corporation's legal penalties from their personal assets.

Owners are only at risk of losing the amount they invested in the corporation.

Owners automatically lose their shares regardless of the lawsuit outcome.

Owners are personally liable for all the corporation's debts and legal obligations.

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Verified step by step guidance

Step 1: Understand the concept of limited liability in corporations. In a corporation, shareholders (owners) are protected by limited liability, meaning their financial risk is restricted to the amount they have invested in the corporation.

Step 2: Analyze the scenario where the corporation is sued and loses its case. The corporation itself is responsible for paying legal penalties or debts incurred as a result of the lawsuit, not the shareholders personally.

Step 3: Clarify that shareholders do not lose their shares automatically due to a lawsuit outcome. Share ownership remains intact unless specific legal actions or agreements dictate otherwise.

Step 4: Emphasize that shareholders are not personally liable for the corporation's debts or legal obligations. This is a key feature of the corporate structure, distinguishing it from sole proprietorships or partnerships.

Step 5: Conclude that the financial impact on shareholders is limited to the potential loss of their investment in the corporation, as the corporation's liabilities do not extend to their personal assets.