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, savings should be treated as which of the following?

Gross income

Expenditure

None of the above

Net income

Previous problemNext problem

Verified step by step guidance

Understand the fundamental accounting equation: Assets = Liabilities + Equity. This equation is the foundation of financial accounting and helps classify financial transactions.

Savings are typically considered part of equity because they represent retained earnings or accumulated wealth that has not been spent or distributed.

Gross income refers to total earnings before any deductions, such as taxes or expenses. Savings are not classified as gross income because they are derived after expenses and taxes are accounted for.

Expenditure refers to money spent on goods, services, or obligations. Savings are not classified as expenditure because they represent money set aside rather than spent.

Net income is the profit remaining after all expenses, taxes, and costs have been deducted from gross income. Savings can be derived from net income but are not synonymous with it. Therefore, savings are not classified as gross income, expenditure, or net income directly.