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

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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Multiple Choice

A loan in which the borrower buys property under a land contract would be classified as which type of accounting?

Installment accounting

Fund accounting

Cash accounting

Accrual accounting

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Verified step by step guidance

Understand the nature of the transaction: A land contract involves the borrower purchasing property and making payments over time, which is key to determining the accounting method.

Review the definitions of the accounting methods provided: Installment accounting, fund accounting, cash accounting, and accrual accounting. Each has distinct characteristics and applications.

Focus on installment accounting: This method is typically used when payments are made in installments over time, and revenue is recognized as payments are received.

Compare installment accounting with the other methods: Cash accounting recognizes transactions when cash is exchanged, accrual accounting recognizes transactions when they occur regardless of cash flow, and fund accounting is used primarily by non-profits and government entities to track funds for specific purposes.

Conclude that the correct classification for a loan under a land contract, where payments are made over time, aligns with the principles of installment accounting.