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

Holding cost is classified as which type of cost in accounting?

Fixed cost

Opportunity cost

Carrying cost

Variable cost

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Verified step by step guidance

Understand the concept of holding cost: Holding cost, also known as carrying cost, refers to the expenses incurred for storing and maintaining inventory over a period of time. These costs typically include storage fees, insurance, depreciation, and obsolescence.

Classify the types of costs in accounting: Fixed costs remain constant regardless of production levels, variable costs change with production levels, and opportunity costs represent the potential benefits lost when choosing one alternative over another.

Recognize that holding cost is not a fixed cost: Holding costs vary depending on the amount of inventory being stored, making them unsuitable to be classified as fixed costs.

Understand why holding cost is not an opportunity cost: Opportunity cost is a theoretical cost representing the value of the next best alternative foregone, which is different from the tangible expenses associated with holding inventory.

Conclude that holding cost is classified as carrying cost: Carrying cost is the correct classification for holding cost, as it directly represents the expenses related to storing and maintaining inventory.