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

When a company sells 10,000 shares of its common stock for cash, which type of accounting is primarily used to record this transaction?

Cost accounting

Managerial accounting

Financial accounting

Tax accounting

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Verified step by step guidance

Understand the nature of the transaction: The company is selling 10,000 shares of its common stock for cash. This is a financial transaction that impacts the company's equity and cash accounts.

Identify the type of accounting involved: Financial accounting is primarily used to record transactions that affect the financial statements, such as the sale of stock. It ensures accurate reporting of the company's financial position to external stakeholders.

Determine the accounts affected: The sale of common stock increases the company's cash (an asset account) and also increases the common stock account (an equity account).

Record the journal entry: In financial accounting, the journal entry would debit the cash account to reflect the inflow of cash and credit the common stock account to reflect the issuance of shares. The entry may also include a credit to 'Additional Paid-In Capital' if the shares are sold above their par value.

Explain why other types of accounting are not applicable: Cost accounting focuses on internal cost management, managerial accounting is used for internal decision-making, and tax accounting deals with tax compliance. None of these are primarily used for recording the sale of stock, which is a financial accounting task.