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

Working capital can be computed by taking current assets minus current _____.

equity

expenses

liabilities

revenue

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Verified step by step guidance

Understand the concept of working capital: Working capital is a measure of a company's short-term financial health and operational efficiency. It is calculated as the difference between current assets and current liabilities.

Identify the components of current assets: Current assets include items such as cash, accounts receivable, inventory, and other assets that are expected to be converted into cash within a year.

Identify the components of current liabilities: Current liabilities include obligations such as accounts payable, short-term debt, and other liabilities that are due within a year.

Set up the formula for working capital: The formula is Working Capital = Current Assets - Current Liabilities. Using MathML, this can be expressed as:

Working Capital = Current Assets - Current Liabilities

Apply the formula to compute working capital: Subtract the total value of current liabilities from the total value of current assets to determine the working capital. This calculation helps assess whether the company has enough short-term assets to cover its short-term liabilities.