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 is an expression of the fundamental accounting equation?

Revenues - Expenses = Net Income

Assets + Liabilities = Owner's Equity

Owner's Equity = Assets - Revenues

Assets = Liabilities + Owner's Equity

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Verified step by step guidance

Step 1: Understand the fundamental accounting equation, which is the foundation of financial accounting. It states that Assets = Liabilities + Owner's Equity. This equation ensures that a company's financial position is balanced.

Step 2: Analyze the options provided in the problem. The first option, 'Revenues - Expenses = Net Income,' is related to the income statement and not the fundamental accounting equation. The second option, 'Assets + Liabilities = Owner's Equity,' is incorrect because it does not align with the fundamental accounting equation.

Step 3: Evaluate the third option, 'Owner's Equity = Assets - Revenues.' This is also incorrect because revenues are not part of the fundamental accounting equation. Revenues are part of the income statement and affect Owner's Equity indirectly through net income.

Step 4: Confirm that the correct expression of the fundamental accounting equation is 'Assets = Liabilities + Owner's Equity.' This equation reflects the balance between what a company owns (assets) and how those assets are financed (liabilities and owner's equity).

Step 5: Conclude that the correct answer is 'Assets = Liabilities + Owner's Equity,' as it accurately represents the fundamental accounting equation used in financial accounting.