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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

Classify the following accounts as assets (A), liabilities (L), owner’s equity (OE), revenue (R), or expense (E). Indicate the financial statement on which the account belongs—income statement (IS), statement of owner’s equity (SOE), or balance sheet (BS).

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To determine

Classify the following accounts as assets (A), liabilities (L), Owners’ equity (OE), revenue (R), or expense (E) and indicate the financial statement on which the account belongs.

Explanation

Liabilities: The claims creditors have over assets or resources of a company are referred to as liabilities. These are the debt obligations owed by company to creditors. Liabilities are classified on the balance sheet as current liabilities and long-term liabilities.

Owners’ equity: The claims of owners on a company’s resources, after the liabilities are paid off, are referred to as stockholders’ equity. Thus, stockholders’ equity is sometimes referred to as net worth of owners or shareholders or stockholders.

Revenues: Revenues are earnings from operations of a business. The operating activities are sale of goods and services, and rent revenue.

Expenses: Expenses are costs incurred for the operations of a business. The costs incurred for generating revenues are rent expense, depreciation expense, general and administrative expenses, selling expenses, and utilities expense.

Balance sheet: This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources...

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