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

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Multiple Choice

Which three components make up the fundamental accounting equation?

Assets, Revenues, and Expenses

Liabilities, Revenues, and Expenses

Assets, Liabilities, and Owner's Equity

Owner's Equity, Revenues, and Cash

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Verified step by step guidance

Step 1: Understand the fundamental accounting equation, which is the foundation of financial accounting. It represents the relationship between a company's resources (assets), obligations (liabilities), and ownership interest (owner's equity).

Step 2: Recall the formula for the fundamental accounting equation:

Assets = Liabilities + Owner's Equity

. This equation ensures that the balance sheet remains balanced.

Step 3: Analyze the options provided in the problem. The correct components of the fundamental accounting equation are Assets, Liabilities, and Owner's Equity. Revenues, Expenses, and Cash are not part of this equation but are related to other financial statements like the income statement and cash flow statement.

Step 4: Recognize that Assets represent what the company owns, Liabilities represent what the company owes, and Owner's Equity represents the residual interest of the owners after liabilities are subtracted from assets.

Step 5: Apply this understanding to ensure clarity in distinguishing between the fundamental accounting equation and other financial concepts, such as revenues and expenses, which are part of the income statement rather than the balance sheet.