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 best defines an asset in the context of the fundamental accounting equation?

The residual interest in the assets of the entity after deducting liabilities.

An obligation arising from past events, the settlement of which is expected to result in an outflow of resources.

A claim by creditors against the resources of the entity.

A resource controlled by an entity as a result of past events, from which future economic benefits are expected to flow to the entity.

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Verified step by step guidance

Step 1: Understand the fundamental accounting equation, which is Assets = Liabilities + Equity. This equation forms the basis of financial accounting and helps define the components of an entity's financial position.

Step 2: Define an asset in the context of accounting. An asset is a resource controlled by an entity as a result of past events, from which future economic benefits are expected to flow to the entity.

Step 3: Compare the definition of an asset with the other options provided in the problem. For example, 'The residual interest in the assets of the entity after deducting liabilities' refers to equity, not assets.

Step 4: Evaluate the option 'An obligation arising from past events, the settlement of which is expected to result in an outflow of resources.' This describes a liability, not an asset.

Step 5: Confirm that the correct answer aligns with the definition of an asset: 'A resource controlled by an entity as a result of past events, from which future economic benefits are expected to flow to the entity.' This matches the fundamental concept of an asset in accounting.