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

Joe has a life insurance policy that has a face amount of $300,000. Under which type of accounting would the proceeds from this policy be recorded if Joe is the owner of a business and the policy is intended to benefit the business upon his death?

Estate accounting

Financial accounting

Fund accounting

Managerial accounting

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Verified step by step guidance

Understand the context of the problem: Joe owns a business, and the life insurance policy is intended to benefit the business upon his death. This means the proceeds are tied to the business's financial structure and purpose.

Review the types of accounting mentioned: Estate accounting deals with the management of an individual's assets after death, Financial accounting focuses on reporting financial information to external parties, Managerial accounting is used for internal decision-making, and Fund accounting is used to track resources that are restricted for specific purposes.

Recognize that Fund accounting is typically used by organizations (such as non-profits or government entities) to manage resources that are designated for specific purposes. In this case, the life insurance proceeds are intended to benefit the business, which aligns with the principles of Fund accounting.

Consider why other types of accounting are not applicable: Estate accounting is not relevant because the policy benefits the business, not Joe's personal estate. Financial accounting and Managerial accounting do not specifically address the tracking of restricted resources like Fund accounting does.

Conclude that the proceeds from the life insurance policy would be recorded under Fund accounting, as it is the correct type of accounting for tracking resources designated for specific purposes, such as benefiting the business upon Joe's death.