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

The balance sheet balances when:

Revenues equal Expenses

Assets equal the sum of Liabilities and Equity ($\text{Assets} = \text{Liabilities} + \text{Equity}$)

Liabilities equal Assets minus Equity

Equity equals Liabilities plus Assets

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Verified step by step guidance

Understand the fundamental accounting equation: Assets = Liabilities + Equity. This equation is the cornerstone of the balance sheet and ensures it balances.

Recognize that the balance sheet represents a snapshot of a company's financial position at a specific point in time, showing what the company owns (Assets), owes (Liabilities), and the residual interest (Equity).

Analyze the options provided in the problem. The correct answer aligns with the fundamental accounting equation, which states that Assets equal the sum of Liabilities and Equity.

Eliminate incorrect options by comparing them to the accounting equation. For example, 'Revenues equal Expenses' pertains to the income statement, not the balance sheet, and 'Equity equals Liabilities plus Assets' contradicts the accounting equation.

Conclude that the balance sheet balances when Assets = Liabilities + Equity, as this equation ensures the financial position is accurately represented.