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 best describes the primary difference between stocks and bonds?

Stocks guarantee fixed interest payments, while bonds provide dividends based on company profits.

Stocks are only issued by governments, while bonds are only issued by corporations.

Stocks must be repaid at maturity, while bonds do not have a maturity date.

Stocks represent ownership in a company, while bonds represent a loan made to a company or government.

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Verified step by step guidance

Understand the nature of stocks: Stocks represent ownership in a company. When you purchase a stock, you are buying a share of the company, which entitles you to a portion of its profits (if dividends are paid) and voting rights in certain cases.

Understand the nature of bonds: Bonds represent a loan made to a company or government. When you purchase a bond, you are lending money to the issuer in exchange for periodic interest payments and the return of the principal amount at maturity.

Clarify the difference in payment structure: Stocks may provide dividends, which are not guaranteed and depend on the company's profitability and decision to distribute profits. Bonds, on the other hand, typically guarantee fixed interest payments over the life of the bond.

Clarify the difference in ownership and obligation: Stocks signify ownership in the company, meaning shareholders have a stake in the company's assets and earnings. Bonds do not confer ownership; instead, they are a debt instrument, meaning the issuer is obligated to repay the loan with interest.

Summarize the primary difference: Stocks represent equity (ownership), while bonds represent debt (a loan). This distinction is fundamental to understanding the roles these instruments play in financial markets.