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

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Multiple Choice

Which part of Suarez Farms' financial statements represents the capital invested in the business according to the fundamental accounting equation?

Total Assets

Owner's Equity

Total Liabilities

Net Income

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Verified step by step guidance

Understand the fundamental accounting equation: Assets = Liabilities + Owner's Equity. This equation represents the relationship between a company's resources (assets), obligations (liabilities), and the owner's investment (owner's equity).

Identify the components of the financial statements provided in the problem: Total Assets, Total Liabilities, Owner's Equity, and Net Income.

Recognize that 'Owner's Equity' is the portion of the fundamental accounting equation that represents the capital invested in the business by the owner(s). It is calculated as the residual interest in the assets of the business after deducting liabilities.

Clarify that 'Net Income' is not part of the fundamental accounting equation directly but contributes to Owner's Equity through retained earnings. Net Income increases Owner's Equity when profits are retained in the business.

Conclude that the correct part of Suarez Farms' financial statements representing the capital invested in the business is 'Owner's Equity,' as it directly reflects the owner's investment according to the fundamental accounting equation.