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 statements is incorrect regarding flow-through entities?

Flow-through entities do not pay income tax at the entity level; instead, income is passed through to the owners.

Flow-through entities are subject to double taxation, where both the entity and the owners are taxed on the same income.

Owners of flow-through entities report their share of the entity's income on their personal tax returns.

Examples of flow-through entities include partnerships and S corporations.

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Verified step by step guidance

Step 1: Understand the concept of flow-through entities. Flow-through entities are business structures where the income generated by the entity is not taxed at the entity level. Instead, the income 'flows through' to the owners, who report it on their personal tax returns.

Step 2: Clarify the taxation process for flow-through entities. Unlike corporations, flow-through entities are not subject to double taxation. Double taxation occurs when income is taxed at both the entity level and the individual level, which is not the case for flow-through entities.

Step 3: Review the examples of flow-through entities. Common examples include partnerships, S corporations, and sole proprietorships. These entities allow income to pass directly to the owners without being taxed at the entity level.

Step 4: Analyze the incorrect statement provided in the problem. The statement 'Flow-through entities are subject to double taxation, where both the entity and the owners are taxed on the same income' is incorrect because flow-through entities are specifically designed to avoid double taxation.

Step 5: Conclude that the correct understanding of flow-through entities is essential for financial accounting and taxation, as it impacts how income is reported and taxed for business owners.