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

Which of the following statements is true regarding a sole proprietorship?

A sole proprietorship is a separate legal entity from its owner.

The owner has unlimited personal liability for the debts of the business.

Ownership of a sole proprietorship can be easily transferred to another person.

Profits from a sole proprietorship are taxed at the corporate tax rate.

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Verified step by step guidance

Understand the concept of a sole proprietorship: A sole proprietorship is a business structure where the business and the owner are legally the same entity. This means the owner is personally responsible for all debts and obligations of the business.

Clarify the legal liability: In a sole proprietorship, the owner has unlimited personal liability. This means that if the business incurs debts or legal claims, the owner's personal assets can be used to satisfy those obligations.

Examine the tax implications: Profits from a sole proprietorship are not taxed at the corporate tax rate. Instead, they are reported on the owner's personal income tax return and taxed at the individual tax rate.

Consider ownership transferability: Ownership of a sole proprietorship cannot be easily transferred to another person because the business is tied directly to the owner. A new owner would need to establish a new sole proprietorship.

Evaluate the statement about legal entity status: A sole proprietorship is not a separate legal entity from its owner. The business and the owner are considered the same for legal and tax purposes.