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

Useful Information

Financial Accounting

1. Introduction to Accounting

Useful Information

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Multiple Choice

Why should the budget allowance for variable costs be flexed?

To account for changes in the selling price of products.

Because variable costs change in direct proportion to the level of activity, and flexing ensures the budget reflects actual activity levels.

To adjust for errors in the original fixed cost estimates.

Because variable costs remain constant regardless of activity level.

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Verified step by step guidance

Understand the nature of variable costs: Variable costs are expenses that change directly in proportion to the level of activity or production. Examples include raw materials and direct labor costs.

Recognize the purpose of flexing a budget: Flexing a budget means adjusting the budgeted figures to reflect the actual level of activity. This ensures that the budget remains relevant and accurate as activity levels change.

Identify why flexing is necessary for variable costs: Since variable costs are tied to activity levels, flexing the budget allows for a more accurate comparison between actual costs and budgeted costs at the same activity level.

Distinguish variable costs from fixed costs: Fixed costs remain constant regardless of activity level, while variable costs fluctuate. Flexing is specifically relevant for variable costs due to their proportional nature.

Conclude the importance of flexing: Flexing the budget for variable costs ensures that the financial analysis and performance evaluation are based on realistic and comparable figures, reflecting the actual activity levels.