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

Consider Jasper’s balance sheet. Which of the following shows how to calculate Jasper’s net worth?

Net Worth = Liabilities - Assets

Net Worth = Assets - Liabilities

Net Worth = Assets + Liabilities

Net Worth = Assets \times Liabilities

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Verified step by step guidance

Understand the concept of net worth: Net worth represents the difference between what a person or entity owns (assets) and what they owe (liabilities). It is a measure of financial health.

Review the formula options provided in the problem: Carefully analyze each formula to determine which one correctly calculates net worth.

Recall the correct formula for net worth: Net Worth = Assets - Liabilities. This formula subtracts liabilities from assets to determine the remaining value.

Eliminate incorrect options: For example, Net Worth = Liabilities - Assets is incorrect because it reverses the calculation, Net Worth = Assets + Liabilities is incorrect because it adds liabilities instead of subtracting them, and Net Worth = Assets × Liabilities is incorrect because net worth is not calculated through multiplication.

Conclude that the correct formula for calculating Jasper’s net worth is Net Worth = Assets - Liabilities, as it aligns with the standard definition of net worth in financial accounting.