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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

LO3 Which of these would be listed first on a balance sheet?

  1. (a) Accounts Receivable
  2. (b) Delivery Equipment
  3. (c) Accounts Payable
  4. (d) Prepaid Insurance

To determine

State the option that would be listed first on a balance sheet.

Explanation

Balance sheet: This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources. The resources of the company are assets which include money contributed by stockholders and creditors. Hence, the main elements of the balance sheet are assets, liabilities, and stockholders’ equity.

Justification for the incorrect option of (b):

Delivery Equipment is a long-term asset and it is listed on the balance sheet after all current assets. Therefore, it is an incorrect option.

Justification for the incorrect option of (c):

Accounts payable is a current liability and it is listed on the balance sheet after recording the total of all current assets and long-term assets...

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