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

Revenue Recognition and Expense Recognition

Financial Accounting

3. Accrual Accounting Concepts

Revenue Recognition and Expense Recognition

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Multiple Choice

When are refundable security deposits forfeited by the tenant considered rental income for the landlord?

When the tenant forfeits the deposit by violating the lease agreement

When the deposit is initially received from the tenant

At the end of each accounting period regardless of tenant actions

Only when the lease is renewed by the tenant

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Verified step by step guidance

Understand the concept of refundable security deposits: These are amounts paid by tenants to landlords as a guarantee for fulfilling lease terms. They are typically held by the landlord and returned to the tenant if the lease terms are met.

Identify the conditions under which refundable security deposits are forfeited: Forfeiture occurs when the tenant violates the lease agreement, such as causing damage to the property or failing to pay rent.

Determine the accounting treatment for forfeited deposits: When a tenant forfeits the deposit, the landlord can recognize it as rental income because the deposit is no longer refundable and effectively becomes part of the landlord's earnings.

Clarify why the deposit is not considered rental income at other times: When the deposit is initially received, it is recorded as a liability (unearned revenue) because it is refundable. It does not become income until forfeited. Similarly, it is not recognized as income at the end of each accounting period or upon lease renewal unless forfeited.

Conclude that refundable security deposits are considered rental income for the landlord only when the tenant forfeits the deposit by violating the lease agreement.