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

The Financial Statements

Financial Accounting

1. Introduction to Accounting

The Financial Statements

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Multiple Choice

Which of the following statements about assets reported in the balance sheet is true?

Assets are not affected by the matching principle.

Only tangible assets are included in the balance sheet.

Assets are listed in order of liquidity, with the most liquid assets listed first.

Assets are reported at their current market value on the balance sheet.

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Verified step by step guidance

Understand the concept of assets: Assets are resources owned by a company that have economic value and are expected to provide future benefits. They are reported on the balance sheet, which is a financial statement summarizing a company's financial position at a specific point in time.

Review the matching principle: The matching principle is an accounting concept that requires expenses to be recognized in the same period as the revenues they help generate. Assets, however, are not directly affected by this principle because they are reported based on their value and not tied to specific revenue recognition.

Clarify the inclusion of tangible and intangible assets: Both tangible assets (e.g., equipment, buildings) and intangible assets (e.g., patents, trademarks) are included in the balance sheet, provided they meet the criteria for recognition as assets.

Understand the order of liquidity: Assets are listed on the balance sheet in order of liquidity, meaning the most liquid assets (e.g., cash, accounts receivable) are listed first, followed by less liquid assets (e.g., inventory, property, plant, and equipment). This helps users of financial statements understand the company's ability to convert assets into cash.

Discuss valuation of assets: Assets are generally reported at their historical cost or book value, not their current market value. Historical cost is the original purchase price, adjusted for depreciation or amortization, if applicable. This ensures consistency and reliability in financial reporting.