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

Which statement is correct regarding entering transactions into the fundamental accounting equation?

A transaction can increase assets without affecting liabilities or equity.

Every transaction affects at least two accounts, keeping the equation balanced.

Only revenue transactions impact the accounting equation.

The accounting equation is only updated at the end of the accounting period.

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Verified step by step guidance

Understand the fundamental accounting equation: Assets = Liabilities + Equity. This equation must always remain balanced.

Recognize that every transaction in accounting affects at least two accounts to maintain the balance of the equation. For example, if assets increase, either liabilities or equity must also increase, or another asset must decrease.

Evaluate the first statement: 'A transaction can increase assets without affecting liabilities or equity.' This is incorrect because any increase in assets must be offset by a change in liabilities, equity, or another asset to keep the equation balanced.

Evaluate the second statement: 'Every transaction affects at least two accounts, keeping the equation balanced.' This is correct because the accounting equation must remain balanced after every transaction.

Review the remaining statements: 'Only revenue transactions impact the accounting equation' and 'The accounting equation is only updated at the end of the accounting period.' Both are incorrect because all types of transactions (not just revenue) impact the equation, and the equation is updated continuously as transactions occur.