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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following formulas correctly represents the expanded accounting equation?

Assets = Liabilities + Owner's Capital + Expenses - Revenues + Drawings

Assets = Liabilities + Owner's Capital - Revenues + Expenses + Drawings

Assets = Liabilities - Owner's Capital + Revenues + Expenses - Drawings

Assets = Liabilities + Owner's Capital + Revenues - Expenses - Drawings

Previous problemNext problem

Verified step by step guidance

Step 1: Begin by understanding the basic accounting equation, which is Assets = Liabilities + Owner's Equity. This equation represents the foundation of financial accounting.

Step 2: Expand the basic accounting equation to include the components of Owner's Equity. Owner's Equity is affected by Revenues, Expenses, and Drawings. Revenues increase Owner's Equity, while Expenses and Drawings decrease it.

Step 3: Incorporate these components into the equation. The expanded accounting equation becomes: Assets = Liabilities + Owner's Capital + Revenues - Expenses - Drawings.

Step 4: Compare the given formulas to the expanded accounting equation derived in Step 3. Identify the formula that matches the correct expanded accounting equation.

Step 5: Verify the logic of the correct formula by ensuring it aligns with the principles of accounting, where Revenues increase equity, and Expenses and Drawings decrease equity.