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

7. Receivables and Investments

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

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Multiple Choice

Which of the following best helps entrepreneurs assess the viability of a company for generating profits before making an investment?

Relying solely on market rumors

Analyzing the company's financial statements

Focusing only on the company's marketing materials

Ignoring industry trends

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Verified step by step guidance

Understand the purpose of financial statements: Financial statements provide a detailed overview of a company's financial health, including its revenues, expenses, assets, liabilities, and equity. They are essential tools for assessing profitability and viability.

Identify the key components of financial statements: Entrepreneurs should focus on the income statement (to evaluate profitability), the balance sheet (to assess financial stability), and the cash flow statement (to understand liquidity and cash management).

Analyze the income statement: Review the company's revenues, cost of goods sold, operating expenses, and net income to determine if the company is generating profits and how sustainable those profits are.

Examine the balance sheet: Assess the company's assets, liabilities, and equity to understand its financial position and whether it has the resources to sustain operations and growth.

Evaluate the cash flow statement: Analyze cash inflows and outflows to ensure the company has sufficient liquidity to meet its obligations and invest in future growth. This helps entrepreneurs gauge the company's ability to generate cash effectively.