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 statement best explains what it means to use credit in accounting?

To transfer funds from one bank account to another.

To recognize cash received from customers.

To record an increase in a liability, equity, or revenue account, or a decrease in an asset or expense account.

To record an increase in an asset or expense account, or a decrease in a liability, equity, or revenue account.

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Verified step by step guidance

Step 1: Understand the concept of 'credit' in accounting. In double-entry bookkeeping, every transaction involves both a debit and a credit. A credit is used to record changes in specific accounts based on the type of account being affected.

Step 2: Learn the impact of credit on different types of accounts. Credits increase liability, equity, and revenue accounts, while they decrease asset and expense accounts. This is a fundamental rule in accounting.

Step 3: Compare the options provided in the problem. Analyze each statement to determine which aligns with the definition of credit in accounting.

Step 4: Eliminate incorrect options. For example, transferring funds between bank accounts or recognizing cash received from customers does not directly define the use of credit in accounting.

Step 5: Select the correct answer based on the definition of credit. The correct statement is: 'To record an increase in a liability, equity, or revenue account, or a decrease in an asset or expense account.' This matches the accounting principle for credit usage.