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

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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Multiple Choice

In the context of financial accounting, which two elements should a bank ensure it has plenty of to maintain liquidity and solvency?

liabilities and expenses

revenues and receivables

assets and capital

equity and depreciation

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Verified step by step guidance

Understand the concepts of liquidity and solvency: Liquidity refers to a company's ability to meet short-term obligations, while solvency refers to its ability to meet long-term obligations and sustain operations.

Identify the elements that contribute to liquidity: Assets, particularly current assets like cash and accounts receivable, are crucial for liquidity as they can be quickly converted into cash to meet short-term liabilities.

Identify the elements that contribute to solvency: Capital, which includes equity and retained earnings, is essential for solvency as it represents the financial foundation of the company and its ability to sustain operations over the long term.

Analyze why liabilities and expenses, revenues and receivables, and equity and depreciation are not the correct answers: Liabilities and expenses represent obligations rather than resources, revenues and receivables are income-related but do not directly address liquidity and solvency, and equity and depreciation do not encompass the full scope of maintaining liquidity and solvency.

Conclude that assets and capital are the correct elements to focus on for maintaining liquidity and solvency, as they provide the necessary resources and financial stability to meet both short-term and long-term obligations.