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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

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BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
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Financial statements

Each of the following items is shown in the financial statements of Exxon Mobil Corporation:

1. Accounts payable

2. Cash equivalents

3. Crude oil inventory

4. Equipment

5. Exploration expenses

6. Income taxes payable

7. Investments

8. Long-term debt

9. Marketable securities

10. Notes and loans payable

11. Notes receivable

12. Operating expenses

13. Prepaid taxes

14. Sales

15. Selling expenses

a. Identify the financial statement (balance sheet or income statement) in which each item would appear.

b. Can an item appear on more than one financial statement?

c. Is the accounting equation relevant for Exxon Mobil Corporation?

a)

To determine

Financial statement: Financial statements are condensed summary of transactions communicated in the form of reports for the purpose of decision making. The financial statements reports, and shows the financial status of the business. The financial statements consist of the balance sheet, income statement, statement of retained earnings, and the cash flow statement.

To Identify: the list of items that will appear in the financial statements (income statement or balance sheet) of EM Corporation.

Explanation

  • Accounts payable: Accounts payable is a liability of the firm, which refers to the obligations which the company owes for purchase of certain goods or services in the past; hence it is shown in the balance sheet.
  • Cash: Cash is an asset; hence it is shown in the balance sheet.
  • Crude Oil inventory: Crude oil inventory is an asset; hence it is shown in the balance sheet.
  • Equipment: Equipment is an asset; hence it is shown in the balance sheet.
  • Exploration Expense: Exploration expense is an expense incurred while exploring oil; hence it is shown in the income statement.
  • Income taxes payable: Income taxes payable is a liability which the company owes; hence it is shown in the balance sheet.
  • Investments: Investments are an asset; hence it is shown in the balance sheet.
  • Long Term Debt: Long-term debt is a long term liability which the company owes; hence it is shown in the balance sheet...

b)

To determine

To Identify: If an item can appear on more than one financial statement (income statement or balance sheet).

c)

To determine

To Explain: If the accounting equation is relevant to the EM Corporation.

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