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 accounting principle states that revenue should be recognized in the accounting period in which it is earned, regardless of when the cash is received?

Monetary Unit Assumption

Revenue Recognition Principle

Matching Principle

Historical Cost Principle

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Verified step by step guidance

Understand the concept of revenue recognition: Revenue should be recorded in the accounting period when it is earned, not necessarily when cash is received. This ensures that financial statements accurately reflect the company's performance during a specific period.

Review the Revenue Recognition Principle: This principle is a fundamental accounting guideline that dictates the timing of revenue recognition. It ensures that revenue is recognized when the earning process is complete and the amount can be reliably measured.

Compare the Revenue Recognition Principle with other accounting principles: For example, the Matching Principle focuses on matching expenses with revenues in the same period, while the Historical Cost Principle records assets at their original purchase price, and the Monetary Unit Assumption assumes transactions are recorded in a stable currency.

Identify the correct principle based on the problem: Since the question asks about recognizing revenue in the period it is earned, the Revenue Recognition Principle is the most relevant.

Apply this principle in practice: When preparing financial statements, ensure that revenue is recorded in the period it is earned, even if payment is received in a different period, to maintain accurate and consistent reporting.