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

Which of the following is the correct statement about variable costs?

Variable costs per unit increase as production increases.

Variable costs are not affected by the volume of production.

Variable costs remain constant in total regardless of changes in the level of activity.

Variable costs change in total in direct proportion to changes in the level of activity.

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Verified step by step guidance

Understand the concept of variable costs: Variable costs are expenses that change in total based on the level of activity or production. Examples include direct materials and direct labor costs.

Clarify the behavior of variable costs per unit: Variable costs per unit remain constant regardless of the level of production. For example, if the cost per unit of a material is $5, it stays $5 whether you produce 10 units or 100 units.

Analyze the behavior of total variable costs: Total variable costs increase or decrease in direct proportion to the level of activity. For instance, if you produce 10 units at $5 per unit, the total cost is $50. If production increases to 20 units, the total cost becomes $100.

Evaluate the incorrect statements: The statement 'Variable costs per unit increase as production increases' is incorrect because the cost per unit remains constant. The statement 'Variable costs are not affected by the volume of production' is incorrect because total variable costs change with production levels. The statement 'Variable costs remain constant in total regardless of changes in the level of activity' is incorrect because total variable costs vary with activity levels.

Confirm the correct statement: The correct statement is 'Variable costs change in total in direct proportion to changes in the level of activity,' as this accurately reflects the behavior of variable costs in financial accounting.