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

Financial intermediaries exist because small investors cannot efficiently:

diversify their investments and monitor borrowers on their own

record transactions using double-entry bookkeeping

prepare their own financial statements

calculate depreciation using the straight-line method

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Verified step by step guidance

Understand the role of financial intermediaries: Financial intermediaries, such as banks, mutual funds, and insurance companies, exist to bridge the gap between small investors and borrowers. They provide services that individual investors may find difficult to perform efficiently on their own.

Analyze the concept of diversification: Diversification involves spreading investments across various assets to reduce risk. Small investors may lack the resources or expertise to diversify their investments effectively, which is why financial intermediaries play a crucial role in pooling funds and managing diversified portfolios.

Consider monitoring borrowers: Monitoring borrowers requires expertise, time, and resources to assess creditworthiness and ensure repayment. Financial intermediaries specialize in this function, making it easier for small investors to indirectly invest in loans or bonds without having to monitor borrowers themselves.

Evaluate the other options: Double-entry bookkeeping, preparing financial statements, and calculating depreciation using the straight-line method are accounting tasks that individuals can learn and perform independently. These tasks are not the primary reason for the existence of financial intermediaries.

Conclude the correct answer: The primary reason financial intermediaries exist is to help small investors efficiently diversify their investments and monitor borrowers, which are tasks that are challenging for individuals to perform on their own.