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 best describes 'beginning inventory plus net purchases' in the context of the fundamental accounting equation?

Net Income

Cost of Goods Sold

Cost of Goods Available for Sale

Ending Inventory

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Verified step by step guidance

Understand the concept: 'Beginning inventory plus net purchases' refers to the total inventory available for sale during a specific period. This is a key component in calculating the Cost of Goods Available for Sale (COGAS).

Recall the formula for Cost of Goods Available for Sale: \( \text{COGAS} = \text{Beginning Inventory} + \text{Net Purchases} \). This formula represents the total inventory that a company has on hand before accounting for any sales or usage.

Differentiate between related terms: Net Income is the profit after all expenses are deducted, Cost of Goods Sold (COGS) is the cost of inventory sold during the period, and Ending Inventory is the inventory remaining at the end of the period. None of these terms directly describe 'Beginning Inventory + Net Purchases' except for COGAS.

Recognize the relationship: Cost of Goods Available for Sale is used to calculate Cost of Goods Sold and Ending Inventory. The formula is \( \text{COGAS} = \text{COGS} + \text{Ending Inventory} \). This shows how COGAS is distributed between sold goods and remaining inventory.

Conclude: The correct description of 'Beginning Inventory + Net Purchases' is Cost of Goods Available for Sale, as it represents the total inventory available for sale during the accounting period.