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 assets does the IRS disregard as being a capital asset?

Inventory held for sale in the ordinary course of business

Artwork purchased for personal enjoyment

Personal residence

Stocks held for investment

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Verified step by step guidance

Understand the definition of a capital asset: According to the IRS, a capital asset generally includes property held by an individual or business for investment purposes, personal use, or enjoyment. Examples include stocks, bonds, personal residences, and artwork purchased for personal enjoyment.

Identify exceptions to capital assets: The IRS explicitly excludes certain types of property from being classified as capital assets. These exceptions include inventory held for sale in the ordinary course of business, depreciable property used in a trade or business, and accounts receivable.

Analyze each option provided in the question: Evaluate whether each asset listed fits the definition of a capital asset or falls under the exceptions outlined by the IRS.

Determine why inventory held for sale in the ordinary course of business is excluded: Inventory is considered ordinary income property because it is directly tied to the business's operations and is not held for investment or personal use.

Conclude that inventory held for sale in the ordinary course of business is disregarded as a capital asset by the IRS, while the other options (artwork for personal enjoyment, personal residence, and stocks held for investment) qualify as capital assets.