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

Business Organization

Financial Accounting

1. Introduction to Accounting

Business Organization

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Multiple Choice

When a business becomes incorporated, which type of risk is most directly reduced for its owners?

Market risk

Personal liability risk

Currency exchange risk

Interest rate risk

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Understand the concept of incorporation: When a business becomes incorporated, it becomes a separate legal entity from its owners. This means the business itself is responsible for its debts and obligations, not the individual owners.

Identify the types of risks listed in the problem: Market risk, personal liability risk, currency exchange risk, and interest rate risk. Each of these risks affects businesses differently.

Focus on personal liability risk: Incorporation directly reduces personal liability risk because the owners' personal assets are protected from business debts and legal claims. This is one of the primary benefits of incorporation.

Compare the other risks: Market risk, currency exchange risk, and interest rate risk are external risks that are not directly affected by the incorporation process. These risks are related to economic factors and business operations rather than the legal structure of the business.

Conclude that incorporation most directly reduces personal liability risk for the owners, as it separates their personal finances from the business's financial obligations.