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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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Asset, liability, and owner’s equity items

Indicate whether each of the following is identified with (1) an asset, (2) a liability, or (3) owner’s equity:

  1. a. accounts payable
  2. b. cash
  3. c. fees earned
  4. d. land
  5. e. supplies
  6. f. wages expense

To determine

Basic Elements of the business:

The assets, liabilities and shareholder’s equities are the basic components of the business. The shareholder’s equities are invested in a business to procure the assets which leads to the generation of the revenue for the business.

To identify: Each of the given elements with asset, liability or owner’s equity.

Explanation

Asset: Assets refer to the resources owned by the business, which are utilized in the course of the business to generate revenue. The following belong to the assets:

  • Cash
  • Land
  • Supplies

Liability: Liabilities include the claims of the creditors on the assets of the business. The liability is the obligation of the business.  The following belong to the liabilities:

  • Accounts Payable

Owner’s equity: Owner’s equity refers to the right the owner posses over the resources of the business. Revenues and the expenses are the components of the owner’s equity...

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