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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Struggling with Financial Accounting?

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Multiple Choice

Which of the following best describes the definition of expenses in financial accounting?

Expenses are increases in assets resulting from the sale of goods or services.

Expenses are decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity, other than those relating to distributions to owners.

Expenses are increases in equity from investments by owners.

Expenses are cash payments made to suppliers only.

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Verified step by step guidance

Step 1: Begin by understanding the concept of 'expenses' in financial accounting. Expenses are defined as decreases in economic benefits during the accounting period, which occur in the form of outflows or depletions of assets or incurrences of liabilities.

Step 2: Recognize that expenses result in a decrease in equity, but they are distinct from distributions to owners. Distributions to owners, such as dividends, are not classified as expenses.

Step 3: Eliminate incorrect options by analyzing their definitions. For example, 'Expenses are increases in assets resulting from the sale of goods or services' is incorrect because increases in assets are typically associated with revenues, not expenses.

Step 4: Similarly, 'Expenses are increases in equity from investments by owners' is incorrect because investments by owners are classified as contributions to equity, not expenses.

Step 5: Finally, 'Expenses are cash payments made to suppliers only' is incorrect because expenses are not limited to cash payments; they can also include non-cash transactions such as depreciation or accrued liabilities.