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

If you have a budget, you have _____.

a plan for allocating resources based on the fundamental accounting equation

a record of all past financial transactions

an income statement for the year

a list of only your liabilities

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Verified step by step guidance

Understand the concept of a budget: A budget is a financial plan that outlines how resources will be allocated over a specific period. It is forward-looking and helps in planning future financial activities.

Relate the budget to the fundamental accounting equation: The fundamental accounting equation is Assets = Liabilities + Equity. A budget uses this equation to allocate resources effectively, ensuring that planned expenses align with available assets and equity.

Differentiate a budget from other financial documents: A budget is not a record of past transactions (like a ledger), nor is it an income statement (which summarizes revenues and expenses for a period). It is also not limited to listing liabilities; it encompasses all aspects of financial planning.

Recognize the purpose of a budget: The primary goal of a budget is to provide a structured plan for managing resources, ensuring financial stability, and achieving specific financial objectives.

Conclude that the correct answer is 'a plan for allocating resources based on the fundamental accounting equation,' as this aligns with the definition and purpose of a budget.