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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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Chart of accounts

The following accounts appeared in recent financial statements of Delta Air Lines:

Accounts Payable Flight Equipment
Advanced Payments for Equipment Frequent Flyer (Obligations)
Air Traffic Liability Fuel Inventory
Aircraft Fuel (Expense) Landing Fees (Expense)
Aircraft Maintenance (Expense) Parts and Supplies
Aircraft Rent (Expense) Passenger Commissions (Expense)
Cargo Revenue Passenger Revenue
Cash Prepaid Expenses
Contract Carrier Arrangements (Expense) Taxes Payable

Identify each account as either a balance sheet account or an income statement account. For each balance sheet account, identify it as an asset, a liability, or owner’s equity. For each income statement account, identify it as a revenue or an expense.

To determine

Balance sheet:

Balance sheet is a financial statement that shows the available assets (owner’s equity and outsider’s equity) and owed liabilities from investing and financial activities of a company. This statement reveals the financial health of company. So, this statement is also called as Statement of Financial Position. It helps the users to know the creditworthiness of a company as to whether the company has enough assets to pay off its liabilities. The main components of balance sheet are assets, liabilities, and stockholders’ equity.

Income statement:

Income statement is a financial statement which reports revenues, and expenses from business operations, and the result of those operations as net income or net loss for a particular time period.

To identify: Whether each of the following account is either a balance sheet or an income statement, and to identify for each balance sheet account, whether it is an asset, a liability, owner’s equity, and for each income statement account, whether it is a revenue or an expense.

Explanation
  • Advanced payments for equipment, Cash, Flight equipment, Fuel inventory, Parts and supplies, and prepaid expenses are the asset accounts which come under the balance sheet.
  • Accounts payable, Air traffic liability, Frequent flyer (obligations), and Taxes payable are the liability accounts which comes under the balance sheet.
  • Nothing comes under the owner’s equity account...

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