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 of the following statements about the fundamental accounting equation is NOT true?

The fundamental accounting equation is: Assets = Liabilities + Equity.

If liabilities increase and assets remain unchanged, equity must decrease.

The equation forms the basis for double-entry bookkeeping.

The equation must always remain in balance after every transaction.

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Verified step by step guidance

Understand the fundamental accounting equation: Assets = Liabilities + Equity. This equation represents the relationship between a company's resources (assets), obligations (liabilities), and ownership interest (equity).

Analyze the statement 'If liabilities increase and assets remain unchanged, equity must decrease.' Using the equation, if assets remain constant and liabilities increase, equity must decrease to maintain balance. This statement is true.

Review the statement 'The equation forms the basis for double-entry bookkeeping.' Double-entry bookkeeping ensures that every transaction affects at least two accounts, maintaining the balance of the fundamental accounting equation. This statement is true.

Evaluate the statement 'The equation must always remain in balance after every transaction.' The fundamental accounting equation is the foundation of accounting, and it must remain balanced after every transaction. This statement is true.

Identify the statement that is NOT true. Since all the other statements are correct, the problem does not provide a false statement about the fundamental accounting equation. Ensure clarity by revisiting the question and confirming the context.