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

2. Transaction Analysis

Trial Balance

Financial Accounting

2. Transaction Analysis

Trial Balance

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Multiple Choice

The opening balance of your most recent statement should equal which of the following?

The total debits for the current period

The sum of all credits in the current statement

The closing balance of your previous statement

The net income for the period

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Verified step by step guidance

Understand the concept of an opening balance: The opening balance is the amount of money or value in an account at the beginning of a financial period. It is carried forward from the closing balance of the previous period.

Review the relationship between the opening balance and the closing balance: The closing balance of the previous statement becomes the opening balance of the current statement. This ensures continuity in accounting records.

Eliminate incorrect options: The opening balance is not related to the total debits or credits for the current period, nor is it directly tied to the net income for the period. These are separate components of financial accounting.

Focus on the correct answer: The opening balance equals the closing balance of the previous statement. This is a fundamental principle in accounting that ensures the accuracy of financial records.

Apply this understanding to similar problems: Whenever you encounter questions about opening balances, remember to trace them back to the closing balance of the prior period for consistency in financial reporting.