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

Which of the following is considered an accounting error?

Classifying an expense as an asset

Transposing digits when recording a transaction

Recording revenue when cash is received

Preparing financial statements in accordance with GAAP

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Verified step by step guidance

Step 1: Understand the concept of accounting errors. Accounting errors are unintentional mistakes made in the process of recording, classifying, or summarizing financial transactions. These errors can affect the accuracy of financial statements.

Step 2: Analyze the first option: 'Classifying an expense as an asset.' This is an accounting error because it misrepresents the nature of the transaction, leading to incorrect financial reporting. Expenses should be recorded in the income statement, while assets are recorded in the balance sheet.

Step 3: Analyze the second option: 'Transposing digits when recording a transaction.' This is a common accounting error known as a transposition error. For example, recording $96 as $69 would result in incorrect financial data.

Step 4: Analyze the third option: 'Recording revenue when cash is received.' This is not necessarily an accounting error. It depends on the accounting method used. Under cash basis accounting, revenue is recorded when cash is received, which is correct. However, under accrual basis accounting, revenue is recorded when earned, regardless of cash receipt.

Step 5: Analyze the fourth option: 'Preparing financial statements in accordance with GAAP.' This is not an accounting error. GAAP (Generally Accepted Accounting Principles) provides guidelines for accurate and consistent financial reporting, and following GAAP is considered correct practice.