About This Chapter
Who's It For?
Anyone who needs help learning or mastering financial accounting material will benefit from the lessons in this chapter. There is no faster or easier way to learn about financial accounting. Among those who would benefit are:
- Students who have fallen behind in understanding the purpose and importance of financial accounting
- Students who struggle with learning disabilities or learning differences, including autism and ADHD
- Students who prefer multiple ways of learning finance (visual or auditory)
- Students who have missed class time and need to catch up
- Students who need an efficient way to learn about financial accounting
- Students who struggle to understand their teachers
- Students who attend schools without extra finance learning resources
How It Works:
- Find videos in our course that cover what you need to learn or review.
- Press play and watch the video lesson.
- Refer to the video transcripts to reinforce your learning.
- Test your understanding of each lesson with short quizzes.
- Verify you're ready by completing the financial accounting chapter exam.
Why It Works:
- Study Efficiently: Skip what you know, review what you don't.
- Retain What You Learn: Engaging animations and real-life examples make topics easy to grasp.
- Be Ready on Test Day: Use the financial accounting chapter exam to be prepared.
- Get Extra Support: Ask our subject-matter experts any financial accounting question. They're here to help!
- Study With Flexibility: Watch videos on any web-ready device.
Students Will Review:
This chapter helps students review the concepts in a financial accounting unit of a standard corporate finance course. Topics covered include:
- The purpose of accounting and its role in business
- Generally accepted accounting principles or GAAP
- The accounting equation and its role in the analysis of business transactions
- Common issues associated with financial information
- Types of internal controls and their limitations
- Auditor's roles
1. What Is Accounting? - Purpose, Importance & Relationship to Business
Just as French is considered the language of love, accounting is considered the language of business. In this lesson, you will learn exactly what accounting is. You will also learn the purpose of accounting, why it is important, and how it relates to the business world.
2. What Is GAAP? - The Generally Accepted Accounting Principles
Rules and regulations are a part of life for everyone, including those in the accounting industry. In this lesson, you will learn about GAAP standards, what they mean to accounting, and who establishes them.
3. Using the Accounting Equation: Analyzing Business Transactions
Transaction analysis can be a tricky task. In this lesson, you will learn what transaction analysis is, how to analyze a transaction, and how it is related to the accounting equation.
4. Typical Problems with Financial Information
The ultimate goal of an accounting professional is to provide accurate and reliable financial information to interested parties. In this lesson, we are going to discuss typical problems with financial information.
5. Internal Controls in Accounting: Definition, Types & Examples
Rules and regulations are a part of everything we do. In this lesson, you will learn about internal controls in accounting. You will learn what they are, why they are important and see examples.
6. Limitations of Internal Control in Financial Reporting
Internal controls are a vital part of the operation of a business. In this lesson, we will discuss what internal controls are and some of the limitations of internal controls.
7. The Role of Auditors in the Accounting Process
Auditors play a pivotal role in the accounting industry. In this lesson, you will learn what an auditor is, what they do, and the steps in the auditing process.
8. Yield Curve: Types & Explanation
In this lesson, we'll explain three types of yield curves: upward, downward and flat. You'll learn about how bond maturities and interests form the basis for each curve and its meaning.
9. What is Direct Payment? - Methods & Forms
In this lesson, we will learn about direct payment. We will define direct payment and learn why someone may use this type of payment. The lesson will conclude with a summary and a quiz.
10. What Is Equity Financing? - Definition, Pros, Cons & Examples
Equity financing is as necessary to a business as air is to a person, but because it comes in several forms, it can easily be misunderstood. This article explains the various types of equity financing and explores their advantages and disadvantages for both companies and investors.
11. What Is Escrow? - Definition & Process
Escrow is, in some ways, like an insurance policy. It depends on a third party to ensure that the terms of an agreement are met and that money (or other assets) only changes hands when those terms are met. If you think escrow is only for real estate purchases, you may be in for a surprise!
12. What is Interest Rate? - Definition, Types & History
Everything costs money, even money. In this lesson, you'll learn about interest rates - specifically, what they are, how they are determined, and what they mean for an individual and an economy.
13. What Is Inventory Turnover? - Definition, Formula & Calculation
Inventory turnover is a financial equation used in accounting to understand how long it takes for a business to convert its inventory to cash. This lesson will explore what inventory turnover means, how it is used, and how it is calculated.
14. What is Legal Tender? - Definition & Laws
Have you ever seen the words 'legal tender' printed on the face of paper money and wondered what that meant? This lesson discusses the meaning of legal tender and clears up a popular misconception about the law establishing legal tender.
15. What Is Needs Assessment? - Definition & Examples
A needs assessment is a tool that can be used in strategic planning. In this lesson, you'll learn what a needs assessment is and its steps. You'll also have a chance to take a short quiz after the lesson.
16. What Is Operating Budget? - Definition & Examples
What are operating budgets? In this lesson, learn about how operating budgets are created and explore how they can be used to help businesses succeed. Some examples will be given.
17. What is Outsourcing? - Definition & Benefits
Outsourcing is a strategy that can benefit a company's bottom line. In this lesson, you'll learn what outsourcing is and some of its benefits as well as look at an example.
18. What is Payroll Tax? - Definition & Example
This lesson will define the payroll tax and explore the various types of payroll taxes. Also, an example that looks at payroll taxes from the viewpoint of the employee will be provided.
19. What is Per Capita Income? - Definition & Example
In this lesson, we will look at income per capita. We will look at the definition and how it is calculated. We will also address accuracy followed by a summary and quiz.
20. What Is Residual Income? - Definition, Model & Formula
Residual income is a highly attractive way to earn money. This lesson discusses two definitions of residual income and gives many examples of how residual income is earned.
21. What is Retail Selling? - Techniques & Process
The understanding of retail selling is important for any successful salesperson. It is a platform for growth in the sales industry. This lesson explains retail selling techniques and the retail selling process. You can then test your knowledge with a quiz!
22. CFA Code of Ethics
In this lesson, we'll talk about the Code of Ethics as set out by the Chartered Financial Analyst (CFA) Institute. You'll learn how this Code of Ethics is designed to help investors invest in a way that will benefit society as a whole instead of harming it.
23. CFA Standards of Professional Conduct
Read this lesson to learn the standards the CFA has set into place with the mission to make investing an ethical and professional business. You'll also learn the reasoning behind the standards.
24. Why Ethical Investing is Important
After reading this lesson, you'll understand why ethical investing is the way to go when it comes to investing your hard earned money. Learn how ethical investing benefits not just you, but others, as well.
25. What is the Difference Between Legal & Ethical Standards?
After reviewing this lesson, you'll learn that what is legal is not always ethical. Learn about these two standards and how they differ from one another.
26. What is EBITDA? - Definition & Formula
In business, managers are interested in analyzing the company's performance. To do this, they would look at the company's earnings before interest, taxes, depreciation, and amortization (EBITDA). Let's take a look at EBITDA and how it's calculated.
27. Related Party Transactions: Definition & Examples
In this lesson, we'll define related-party transactions and discuss the requirements companies must follow for financial reporting and auditing. Learn about the possible risks that these transactions may present, including misstatement of accounts and fraudulent financial reporting.
28. Enterprise Value: Definition & Formula
In this lesson, we'll discuss enterprise value. This is a popular financial metric that tries to answer the question: how much would it cost me to buy the whole company? We'll also describe the various financial ratios that use enterprise value.
29. Equity Value: Definition & Formula
In this lesson, we'll discuss equity value. This is a popular financial metric that measures the value of a company to its shareholders. We'll walk through an example of how to calculate equity value, as well as describe various financial ratios that use it.
30. Market Capitalization: Definition & Formula
In this lesson, you'll learn that the cost per share of stock does not determine the size of the company. Large companies can have stocks that cost less than smaller companies, which is related to a company's market capitalization.
31. LBO Model: Steps & Example
In this lesson, you will learn about leveraged buyout models, their steps and examples. A leveraged buyout (LBO) is financial engineering where a target company is purchased with a combination of small amount of initial equity and most of the debt financing.
32. Time-Weighted Rate of Return: Definition & Formula
The time-weighted rate of return is a way for investors to calculate the return of an investment irrespective of money flows. It allows an investor to see the performance of the underlying investment clearly versus being confused by account values increasing due to additional investment flows coming in.
33. Risk-Adjusted Return: Definition & Formula
This lesson will introduce you to the concept of risk adjusted return. The most widely used formula for measuring risk adjusted return is the Sharpe Ratio which will be introduced and illustrated with examples.
34. Risk-Adjusted Return on Capital (RAROC)
John Longman is a treasury manager in one of the leading banks. He is asked to assess the return on the assets of the banks given that the markets are overshadowed with high default rates. At this point, John uses RAROC which helps him make the right decision. Read on to know how.
35. Floating Exchange Rate: Definition & Examples
When a business buys goods from another country, it needs to know how much it will pay in its own currency. In this lesson, you will learn about the floating exchange rate.
36. Cash Flow Hedge: Example & Effectiveness
In this lesson, you will learn about the basic concepts of a cash flow hedge. What is it? What purpose does it serve? How is it used in business? What are common examples of hedge transactions?
37. Cash Flow Hedge vs. Fair Value Hedge
Two main types of hedges are the fair value hedge and the cash flow hedge. Let's look at examples for both and how they are accounted for, then summarize the differences between the two.
38. Fair Value Hedge: Definition & Example
A fair value hedge reduces the risk from declines in an asset's value. The value of the hedge moves in the opposite direction of the value of the asset it is protecting. We will work through an example and see how it works.
39. What is Cost Saving? - Definition & Examples
In this lesson, we will discuss the term cost savings - what it is, and examples that you may come across. Cost savings is an incredibly important concept in business, and it is much more nuanced than one would expect.
40. Differential Revenue: Definition, Formula & Example
In this lesson, we will discuss differential revenue. This is an important concept used in business to understand the attractiveness, or unattractiveness, of pursuing one investment over another.
41. Differential Income: Definition & Formula
In this lesson, we will discuss differential income, and the related concepts of differential revenue and differential expenses. Differential income is often used in the business world to make decisions about what investment to make, what new product to launch, and where to launch it.
42. Activity Analysis in Accounting: Definition & Example
Understanding financial statements and the stories beyond the numbers are of prime importance in any business. Learn how to analyze a business in terms of its ability to efficiently manage some of its assets in this lesson.
43. Total Landed Cost vs. Total Cost of Ownership
In this lesson, you'll learn what makes total landed cost different from total cost of ownership. You'll learn when you should use one over the other and how you can calculate each.
44. Total Cost of Ownership: Definition, Components & Examples
After reading this lesson, you'll understand how you can use total cost of ownership to help you decide whether or not a particular purchase is worth it in the long run.
45. Total Cost of Ownership: Importance & Benefits
After reading this lesson, you'll understand why some people and companies choose to use the total cost of ownership when deciding whether to make a purchase or not instead of the purchase price.
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Other chapters within the Corporate Finance: Help & Review course
- Introduction to Corporations: Help & Review
- Stockholders & Stakeholders: Help & Review
- Business Capital & Investments: Help & Review
- Raising Capital for Business: Help & Review
- Corporate Spending & Taxation: Help & Review
- Financial Statements: Help & Review
- Analyzing Financial Statements: Help & Review
- Government-Business Relations: Help & Review
- Securities & Anti-Trust Laws: Help & Review
- Accounting Risk & Return: Help & Review
- Options, Bankruptcy & Corporate Finance
- Reform & Emerging Global Markets