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

Which of the following statements is true regarding permanent and temporary accounts in accounting?

Temporary accounts include assets, liabilities, and equity accounts.

Temporary accounts are never closed and always show cumulative balances.

Permanent accounts carry their balances forward to the next accounting period, while temporary accounts are closed at the end of each period.

Permanent accounts are closed to the Income Summary account at the end of the period.

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Verified step by step guidance

Understand the distinction between permanent and temporary accounts: Permanent accounts (such as assets, liabilities, and equity accounts) carry their balances forward to the next accounting period, while temporary accounts (such as revenues, expenses, and dividends) are closed at the end of each accounting period.

Recognize the purpose of closing temporary accounts: Temporary accounts are closed to reset their balances to zero for the next accounting period, ensuring that income and expenses are tracked separately for each period.

Identify the closing process: Temporary accounts are closed by transferring their balances to the Income Summary account, and then the balance of the Income Summary account is transferred to Retained Earnings.

Clarify that permanent accounts are not closed: Permanent accounts maintain cumulative balances and are not reset at the end of the accounting period. They reflect the ongoing financial position of the company.

Review the incorrect statements: Temporary accounts do not include assets, liabilities, and equity accounts, and they do not show cumulative balances. Permanent accounts are not closed to the Income Summary account; only temporary accounts are closed.