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 correctly shows the basic format of a balance sheet?

Revenues - Expenses = Net Income

Assets = Liabilities + Equity

Cash Flows from Operating + Investing + Financing Activities = Net Income

Assets + Liabilities = Equity

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Verified step by step guidance

Understand the purpose of a balance sheet: A balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time. It shows what the company owns (assets), what it owes (liabilities), and the residual interest of the owners (equity).

Recall the accounting equation: The basic format of a balance sheet is based on the fundamental accounting equation, which is \( \text{Assets} = \text{Liabilities} + \text{Equity} \). This equation ensures that the balance sheet is balanced, meaning the total assets are equal to the sum of liabilities and equity.

Analyze the options provided: Compare each option to the accounting equation. The correct format must align with \( \text{Assets} = \text{Liabilities} + \text{Equity} \).

Eliminate incorrect options: For example, 'Revenues - Expenses = Net Income' is the format for the income statement, not the balance sheet. Similarly, 'Cash Flows from Operating + Investing + Financing Activities = Net Income' pertains to the statement of cash flows, not the balance sheet. Lastly, 'Assets + Liabilities = Equity' is incorrect because it does not follow the accounting equation.

Select the correct answer: The correct format of the balance sheet is \( \text{Assets} = \text{Liabilities} + \text{Equity} \), as it accurately represents the accounting equation and the structure of the balance sheet.