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

2. Which of the following statements about temporary (nominal) accounts is correct?

Temporary accounts carry their balances forward to the next period.

Temporary accounts are also known as real accounts.

Temporary accounts include assets and liabilities.

Temporary accounts are closed at the end of each accounting period.

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Verified step by step guidance

Understand the concept of temporary (nominal) accounts: These accounts are used to record transactions for a specific accounting period and are closed at the end of that period. Examples include revenue, expense, and dividend accounts.

Contrast temporary accounts with permanent (real) accounts: Permanent accounts, such as assets, liabilities, and equity, carry their balances forward to the next accounting period and are not closed.

Analyze the incorrect statements: Temporary accounts do not carry their balances forward to the next period, they are closed. They are not known as real accounts, and they do not include assets and liabilities.

Identify the correct statement: Temporary accounts are closed at the end of each accounting period to prepare for the next period. This process involves transferring their balances to permanent accounts, typically retained earnings.

Conclude the reasoning: The correct answer is based on the fundamental principle of closing temporary accounts to reset them for the next accounting period, ensuring accurate financial reporting.