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 statements best describes the relationship between business events and the fundamental accounting equation?

The accounting equation is only affected at the end of the accounting period.

Only external events, not internal events, impact the accounting equation.

Only transactions that can be measured in monetary terms affect the accounting equation.

All business events, regardless of their nature, have an immediate and quantifiable effect on the accounting equation.

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Verified step by step guidance

Step 1: Begin by understanding the fundamental accounting equation, which is Assets = Liabilities + Equity. This equation represents the financial position of a business and must always remain balanced.

Step 2: Recognize that not all business events impact the accounting equation. Only transactions that can be measured in monetary terms are recorded in the accounting system and affect the equation.

Step 3: Differentiate between internal and external events. Internal events, such as depreciation or inventory adjustments, and external events, such as sales or purchases, can impact the accounting equation if they are quantifiable in monetary terms.

Step 4: Clarify that the accounting equation is affected continuously as transactions occur, not just at the end of the accounting period. Each transaction that meets the monetary measurement criteria is recorded immediately.

Step 5: Conclude that the correct statement is: 'Only transactions that can be measured in monetary terms affect the accounting equation,' as this aligns with the principles of financial accounting and ensures the equation remains balanced.