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

2. Transaction Analysis

Journal Entries: Debits and Credits

Financial Accounting

2. Transaction Analysis

Journal Entries: Debits and Credits

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Multiple Choice

Which of the following best describes the two parts of an account number in a typical chart of accounts?

The first part identifies the account's classification (such as asset, liability, or equity), and the second part identifies the specific account within that classification.

The first part shows the account's balance, and the second part shows the account's normal balance side (debit or credit).

The first part represents the company division, and the second part represents the fiscal year.

The first part indicates the transaction date, and the second part indicates the transaction amount.

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Verified step by step guidance

Understand the purpose of a chart of accounts: A chart of accounts is a structured list of all accounts used by a company to record financial transactions. Each account is assigned a unique account number for identification and organization.

Recognize the structure of account numbers: Account numbers typically consist of two parts. The first part identifies the account's classification (e.g., asset, liability, equity, revenue, or expense). The second part specifies the individual account within that classification.

Clarify the role of the first part: The first part of the account number categorizes the account into its broader classification. For example, assets might be assigned numbers starting with '1', liabilities with '2', and equity with '3'. This helps in organizing accounts systematically.

Clarify the role of the second part: The second part of the account number provides a unique identifier for the specific account within the classification. For instance, within the asset classification, '101' might represent 'Cash', and '102' might represent 'Accounts Receivable'.

Eliminate incorrect options: The other options provided in the problem do not align with the standard structure of account numbers in a chart of accounts. For example, account numbers do not typically represent transaction dates, amounts, or fiscal years.