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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

In the context of the fundamental accounting equation, profit is calculated as the total amount of money made minus which of the following?

Prices

Supply

Expenses

Revenue

Previous problemNext problem

Verified step by step guidance

Understand the fundamental accounting equation: Assets = Liabilities + Equity. Profit is a component of equity and is derived from the relationship between revenue and expenses.

Recognize that profit is calculated as the difference between revenue (total money earned) and expenses (costs incurred to generate the revenue).

Clarify the terms: Revenue refers to the total income generated from business activities, while expenses are the costs associated with operating the business, such as rent, salaries, and utilities.

Eliminate incorrect options: 'Prices' and 'Supply' are not directly related to the calculation of profit in the fundamental accounting equation. They may influence revenue or expenses but are not part of the direct formula.

Conclude that profit is calculated as Revenue - Expenses, which aligns with the correct answer provided in the problem.