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 true about the relationship between Dante's assets and liabilities according to the fundamental accounting equation?

Dante's assets are always equal to the sum of his liabilities and owner's equity.

Dante's liabilities are always equal to his owner's equity.

Dante's assets are always less than his liabilities.

Dante's assets are always greater than his liabilities.

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Verified step by step guidance

Understand the fundamental accounting equation: Assets = Liabilities + Owner's Equity. This equation is the foundation of financial accounting and represents the relationship between a company's resources (assets) and the claims against those resources (liabilities and owner's equity).

Analyze the first statement: 'Dante's assets are always equal to the sum of his liabilities and owner's equity.' This aligns directly with the fundamental accounting equation and is true in all cases.

Evaluate the second statement: 'Dante's liabilities are always equal to his owner's equity.' This is incorrect because liabilities and owner's equity are separate components and do not necessarily have to be equal.

Examine the third statement: 'Dante's assets are always less than his liabilities.' This is incorrect because assets can be greater than, equal to, or less than liabilities depending on the owner's equity component.

Review the fourth statement: 'Dante's assets are always greater than his liabilities.' This is also incorrect because assets can vary in relation to liabilities based on the owner's equity. The only universally true statement is the first one, which reflects the fundamental accounting equation.