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

3. Accrual Accounting Concepts

Introduction to Adjusting Journal Entries and Prepaid Expenses

Financial Accounting

3. Accrual Accounting Concepts

Introduction to Adjusting Journal Entries and Prepaid Expenses

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Multiple Choice

When evaluating any capital project proposal, the cost of capital:

is ignored if the project is financed entirely by equity

is only relevant for projects involving long-term debt

serves as the minimum required rate of return for accepting the project

represents the historical cost of previous investments

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Verified step by step guidance

Understand the concept of 'cost of capital': The cost of capital represents the minimum required rate of return that a company must earn on its investment projects to maintain its market value and attract funds. It is a critical benchmark for evaluating capital projects.

Recognize the role of cost of capital in project evaluation: The cost of capital is used as a hurdle rate or discount rate to assess whether a project will generate sufficient returns to justify the investment.

Clarify the misconception about financing: The cost of capital is relevant regardless of whether the project is financed by equity, debt, or a combination of both. It reflects the overall cost of funds used to finance the project.

Distinguish between historical cost and required rate of return: The cost of capital does not represent the historical cost of previous investments; instead, it serves as the forward-looking required rate of return for new projects.

Conclude with the correct interpretation: The cost of capital serves as the minimum required rate of return for accepting a project, ensuring that the project generates enough returns to cover the cost of financing and contribute to shareholder value.