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 financial elements is essential for maintaining the balance in the fundamental accounting equation?

Equity = Assets + Liabilities

Assets = Liabilities + Equity

Assets = Revenue - Expenses

Revenue = Expenses + Liabilities

Previous problemNext problem

Verified step by step guidance

Step 1: Begin by understanding the fundamental accounting equation, which is Assets = Liabilities + Equity. This equation represents the foundation of double-entry accounting and ensures that the financial statements are balanced.

Step 2: Analyze the options provided in the problem. The correct equation must align with the fundamental accounting equation and maintain the balance between assets, liabilities, and equity.

Step 3: Evaluate each option systematically: - 'Equity = Assets + Liabilities' is incorrect because equity is not calculated by adding assets and liabilities. - 'Assets = Revenue - Expenses' is incorrect because revenue and expenses are components of the income statement, not directly part of the fundamental accounting equation. - 'Revenue = Expenses + Liabilities' is incorrect because revenue and expenses are not directly related to liabilities in this manner.

Step 4: Identify the correct equation, which is 'Assets = Liabilities + Equity.' This equation correctly represents the fundamental accounting equation and ensures the balance between the financial elements.

Step 5: Conclude that the fundamental accounting equation is essential for maintaining the balance in financial accounting, as it ensures that all transactions are accurately recorded and reflected in the financial statements.