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

Net worth is calculated by subtracting liabilities from which of the following?

Revenues

Owner's equity

Assets

Expenses

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Verified step by step guidance

Understand the concept of net worth: Net worth represents the value of an entity's assets after deducting its liabilities. It is a measure of financial health and is often referred to as equity in accounting.

Identify the components involved: Net worth is calculated using two key components—assets and liabilities. Assets represent what the entity owns, while liabilities represent what the entity owes.

Recall the formula for net worth: The formula is Net Worth = Assets - Liabilities. This equation highlights that net worth is derived by subtracting liabilities from assets.

Clarify why assets are used: Assets are the total resources owned by the entity, and subtracting liabilities from assets provides the residual value that belongs to the owner(s). This is why assets are the correct answer in this context.

Avoid confusion with other terms: Revenues, owner's equity, and expenses are not directly used in the calculation of net worth. Revenues and expenses relate to the income statement, while owner's equity is the result of net worth calculation.