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

What is the impact on the fundamental accounting equation when an accounts receivable is collected?

Assets increase and liabilities decrease.

Liabilities increase and assets decrease.

Assets decrease and equity decreases.

Assets remain unchanged; one asset (cash) increases while another asset (accounts receivable) decreases.

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Verified step by step guidance

Understand the fundamental accounting equation: Assets = Liabilities + Equity. This equation must always remain balanced.

Identify the transaction: Collecting accounts receivable means cash is received from a customer, which increases the cash account (an asset) and decreases the accounts receivable account (also an asset).

Analyze the impact on assets: Since one asset (cash) increases and another asset (accounts receivable) decreases by the same amount, the total assets remain unchanged.

Confirm there is no impact on liabilities or equity: This transaction does not involve liabilities or equity, so these components remain unaffected.

Conclude that the fundamental accounting equation remains balanced, as the increase in one asset is offset by the decrease in another asset, leaving total assets unchanged.