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 type of accounting identifies the holders who have the first claim to the cash flows of the firm?

Preferred shareholders

Equity holders

Debt holders

Government (tax authorities)

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Verified step by step guidance

Understand the concept of cash flow claims: In financial accounting, cash flows generated by a firm are distributed based on priority. Different stakeholders have varying levels of claim to these cash flows.

Identify the hierarchy of claims: Debt holders typically have the first claim to the cash flows of a firm. This is because they are creditors, and the firm is obligated to repay its debts before distributing funds to other stakeholders.

Compare the claims of other stakeholders: Preferred shareholders and equity holders (common shareholders) have claims to the firm's cash flows, but these are subordinate to debt holders. Equity holders receive residual cash flows after all obligations are met.

Consider the role of government (tax authorities): The government has a claim to cash flows in the form of taxes, but this is not considered a 'first claim' in the context of financial accounting. Taxes are calculated based on profits, which occur after debt obligations are addressed.

Conclude the priority order: Debt holders are prioritized because their claims are contractual obligations, ensuring they are paid before any distributions to shareholders or other parties.