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 statements is correct regarding the definition of a liability?

A liability is a future obligation that may or may not arise from past events.

A liability is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow of resources embodying economic benefits.

A liability is an owner's claim on the assets of the business.

A liability is any asset that generates future economic benefits for the entity.

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Verified step by step guidance

Step 1: Understand the definition of a liability. A liability is defined as a present obligation of an entity that arises from past events, and its settlement is expected to result in an outflow of resources embodying economic benefits (e.g., cash, goods, or services).

Step 2: Analyze the first statement: 'A liability is a future obligation that may or may not arise from past events.' This is incorrect because liabilities are present obligations, not future ones, and they must arise from past events.

Step 3: Analyze the second statement: 'A liability is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow of resources embodying economic benefits.' This is correct as it aligns with the formal definition of a liability.

Step 4: Analyze the third statement: 'A liability is an owner's claim on the assets of the business.' This is incorrect because an owner's claim on the assets is referred to as equity, not a liability.

Step 5: Analyze the fourth statement: 'A liability is any asset that generates future economic benefits for the entity.' This is incorrect because assets, not liabilities, generate future economic benefits. Liabilities represent obligations, not benefits.