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

3. Accrual Accounting Concepts

Introduction to Adjusting Journal Entries and Prepaid Expenses

Financial Accounting

3. Accrual Accounting Concepts

Introduction to Adjusting Journal Entries and Prepaid Expenses

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Multiple Choice

Which of the following is a primary benefit a company can expect when it uses a budgeting process?

Elimination of the need for adjusting journal entries

Improved ability to plan for future expenses and revenues

Automatic recognition of all prepaid expenses as expenses

Guaranteed increase in net income

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Verified step by step guidance

Understand the purpose of budgeting: Budgeting is a financial planning tool that helps a company estimate future revenues and expenses, allocate resources effectively, and set financial goals.

Analyze the options provided in the question: Evaluate each choice to determine whether it aligns with the primary benefits of budgeting. For example, budgeting does not eliminate the need for adjusting journal entries, nor does it automatically recognize prepaid expenses as expenses.

Focus on the correct benefit: Budgeting improves a company's ability to plan for future expenses and revenues by providing a structured framework for forecasting and decision-making.

Consider the impact of budgeting on net income: While budgeting can help optimize financial performance, it does not guarantee an increase in net income. Net income depends on various factors, including operational efficiency and market conditions.

Conclude that the primary benefit of budgeting is its role in enhancing a company's ability to plan for future financial activities, which supports better decision-making and resource allocation.