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 is unlikely to have a high capital intensity ratio?

An automobile manufacturing plant

A utility company

A commercial airline

A software development company

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Verified step by step guidance

Understand the concept of the capital intensity ratio: The capital intensity ratio measures the amount of fixed assets required to generate a dollar of revenue. It is calculated as Fixed Assets / Revenue. Businesses with high capital intensity ratios typically require significant investment in fixed assets to operate.

Analyze the nature of each business: Consider the type of assets and operations involved in each business. For example, automobile manufacturing plants, utility companies, and commercial airlines are capital-intensive industries because they require substantial investment in machinery, equipment, or infrastructure.

Evaluate the software development company: Software development companies primarily rely on intellectual capital (e.g., skilled labor, software tools) rather than physical fixed assets. This means they are less likely to have a high capital intensity ratio compared to the other industries listed.

Compare the industries: Contrast the fixed asset requirements of the software development company with the other industries. The software development company is unlikely to have a high capital intensity ratio because its operations do not depend heavily on physical fixed assets.

Conclude the reasoning: Based on the analysis, the software development company is the correct answer because it operates in a low capital intensity environment, unlike the other options that are capital-intensive industries.