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

Business Organization

Financial Accounting

1. Introduction to Accounting

Business Organization

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Multiple Choice

Which of the following scenarios illustrates a business world without agency relationships?

A corporation hires a CEO to make decisions on behalf of the shareholders.

A company employs a manager to oversee daily operations for the owners.

A sole proprietor manages and operates their own business without delegating any decision-making authority to others.

A partnership appoints one partner to act on behalf of all partners in business transactions.

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Verified step by step guidance

Understand the concept of agency relationships: An agency relationship occurs when one party (the agent) is authorized to act on behalf of another party (the principal) in business transactions or decision-making.

Analyze each scenario provided in the problem to determine whether it involves an agency relationship. For example, hiring a CEO to make decisions on behalf of shareholders involves an agency relationship because the CEO acts as an agent for the shareholders.

Evaluate the scenario of a sole proprietor managing and operating their own business. Since the sole proprietor does not delegate decision-making authority to others, there is no agency relationship in this case.

Compare the sole proprietor scenario to the other options, such as a company employing a manager or a partnership appointing a partner to act on behalf of others. These scenarios involve agency relationships because decision-making authority is delegated.

Conclude that the correct answer is the sole proprietor scenario, as it illustrates a business world without agency relationships, where the owner retains full control and does not act through an agent.