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

Fundamental Accounting Equation

Financial Accounting

1. Introduction to Accounting

Fundamental Accounting Equation

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Multiple Choice

Which of the following accounts directly impacts the equity of a business according to the fundamental accounting equation?

Inventory

Owner's Capital

Prepaid Expenses

Accounts Payable

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Verified step by step guidance

Understand the fundamental accounting equation: Assets = Liabilities + Equity. Equity represents the owner's residual interest in the business after liabilities are subtracted from assets.

Identify the nature of each account listed in the problem: Inventory and Prepaid Expenses are asset accounts, Accounts Payable is a liability account, and Owner's Capital is an equity account.

Recognize that asset accounts (Inventory and Prepaid Expenses) and liability accounts (Accounts Payable) do not directly impact equity. They are components of the equation but do not represent equity itself.

Understand that Owner's Capital is part of equity. It directly impacts the equity of the business because it represents the owner's investment in the business.

Conclude that among the accounts listed, Owner's Capital is the account that directly impacts the equity of a business according to the fundamental accounting equation.