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 is an accurate depiction of the fundamental accounting equation?

Equity = Assets + Liabilities

Assets = Liabilities + Equity

Assets = Revenues - Expenses

Liabilities = Assets + Equity

Previous problemNext problem

Verified step by step guidance

Step 1: Understand the fundamental accounting equation, which is the foundation of financial accounting. It states that the resources owned by a company (Assets) are financed either by obligations (Liabilities) or by the owner's interest (Equity). The equation is expressed as: Assets = Liabilities + Equity.

Step 2: Analyze the options provided in the problem. Compare each option to the fundamental accounting equation to determine which one accurately represents it.

Step 3: Option 1 states 'Equity = Assets + Liabilities.' This is incorrect because it does not align with the fundamental accounting equation. Equity is not the sum of Assets and Liabilities.

Step 4: Option 2 states 'Assets = Liabilities + Equity.' This is correct and matches the fundamental accounting equation. It accurately depicts the relationship between Assets, Liabilities, and Equity.

Step 5: Option 3 and Option 4 are also incorrect. Option 3 ('Assets = Revenues - Expenses') refers to the calculation of net income, not the fundamental accounting equation. Option 4 ('Liabilities = Assets + Equity') reverses the equation and is not accurate.