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 is an example of a transaction that affects only one side of the fundamental accounting equation ($\text{Assets} = \text{Liabilities} + \text{Equity}$)?

A company purchases equipment by paying cash.

A company borrows money from a bank.

A company pays off a loan using cash.

A company issues shares to investors for cash.

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Verified step by step guidance

Step 1: Begin by recalling the fundamental accounting equation: $ ext{Assets} = ext{Liabilities} + ext{Equity}$. This equation must always remain balanced, meaning any transaction will affect at least two accounts to maintain this balance.

Step 2: Analyze the first option: 'A company purchases equipment by paying cash.' In this case, the company is exchanging one asset (cash) for another asset (equipment). Since both accounts are on the same side of the equation (Assets), this transaction affects only the Assets side.

Step 3: Analyze the second option: 'A company borrows money from a bank.' Borrowing money increases both Liabilities (loan payable) and Assets (cash received). This transaction affects both sides of the equation.

Step 4: Analyze the third option: 'A company pays off a loan using cash.' Paying off a loan decreases both Liabilities (loan payable) and Assets (cash). This transaction affects both sides of the equation.

Step 5: Analyze the fourth option: 'A company issues shares to investors for cash.' Issuing shares increases both Equity (capital contributed by investors) and Assets (cash received). This transaction affects both sides of the equation.