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

Business Organization

Financial Accounting

1. Introduction to Accounting

Business Organization

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Multiple Choice

Which of the following statements is true regarding a sole proprietorship?

Profits are taxed at the corporate tax rate.

The owner has unlimited personal liability for business debts.

It is a separate legal entity from its owner.

Ownership can be easily transferred to others.

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Verified step by step guidance

Understand the concept of a sole proprietorship: A sole proprietorship is a business owned and operated by one individual. It is the simplest form of business structure and does not require formal registration as a separate legal entity.

Clarify the tax implications: In a sole proprietorship, profits are taxed as personal income of the owner, not at the corporate tax rate. This is because the business and the owner are considered the same entity for tax purposes.

Examine liability: The owner of a sole proprietorship has unlimited personal liability for business debts. This means that if the business incurs debts or legal obligations, the owner's personal assets can be used to satisfy those obligations.

Evaluate legal entity status: A sole proprietorship is not a separate legal entity from its owner. The business and the owner are legally the same, which is why the owner is personally liable for debts and obligations.

Consider ownership transfer: Ownership in a sole proprietorship cannot be easily transferred to others because the business is tied directly to the individual owner. To transfer ownership, the business would typically need to be dissolved and re-established under a new owner.