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

The Financial Statements

Financial Accounting

1. Introduction to Accounting

The Financial Statements

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Multiple Choice

Which of the following best describes liabilities and stockholders' equity on the balance sheet?

They are both considered current assets.

They are both classified as revenues.

They represent the uses of a company's assets.

They represent the sources of a company's assets.

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Verified step by step guidance

Understand the components of the balance sheet: The balance sheet is divided into three main sections—assets, liabilities, and stockholders' equity. Assets represent what the company owns, while liabilities and stockholders' equity represent how those assets are financed.

Clarify the concept of liabilities: Liabilities are obligations that the company owes to external parties, such as loans, accounts payable, or other debts. They are considered a source of financing for the company's assets.

Clarify the concept of stockholders' equity: Stockholders' equity represents the owners' claim on the company's assets after liabilities are deducted. It includes items like common stock, retained earnings, and additional paid-in capital. This is another source of financing for the company's assets.

Explain the relationship between liabilities, stockholders' equity, and assets: The accounting equation states that Assets = Liabilities + Stockholders' Equity. This equation shows that liabilities and stockholders' equity are the sources of funding for the company's assets.

Conclude with the correct description: Liabilities and stockholders' equity on the balance sheet are best described as the sources of a company's assets, as they represent how the company finances its operations and acquisitions.