Classifying assets Identify each of the following as (A) a current asset or (B) property, plant, and equipment: 1. Accounts Receivable 2. Building 3. Cash 4. Equipment 5. Prepaid Insurance 6. Supplies

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Financial And Managerial Accounting

15th Edition

WARREN + 1 other

Publisher: Cengage Learning,

ISBN: 9781337902663

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BuyFind

Financial And Managerial Accounting

15th Edition

WARREN + 1 other

Publisher: Cengage Learning,

ISBN: 9781337902663

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Answer 4

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Answer 5

To determine

Identify the following items as (a) current asset or (b) property, plant and equipment.

Explanation of Solution

Classification of Assets

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

In accounting, the assets are classified into two categories:

Current Assets: Current assets are the assets that are easily convertible to cash within a year of business operations. For example, cash and cash equals, Account receivables, Inventories, Prepaid Expenses.

Non-current Assets: It indicates to the assets otherwise known as fixed assets, that are held by the concern for more than one year and are not meant to be sold in the near future rather held to generate profits. It is classified into two categories:

• Intangible Assets: It refers to the assets that have physical existence that can be seen, felt and touched. For example, property, furniture, and machinery.
• Tangible Assets: It refers to the assets that does not have any physical existence and cannot be seen, felt or touched. For example, patents, copyrights, and goodwill.

S. No	Account name	Classification of assets
1.	Accounts receivable	Current assets (a)
2.	Building	Property, plant, and equipment (b)
3.	Cash	Current assets (a)
4.	Equipment	Property, plant, and equipment (b)
5.	Prepaid insurance	Current assets (a)
6.	Supplies	Current assets (a)

Table (1)

Accounts Receivable – Current assets

Current assets refer to the assets of a business, which are kept in reserve for converting them into cash, in a short time period, or within twelve months...

Classifying assets Identify each of the following as (A) a current asset or (B) property, plant, and equipment: 1. Accounts Receivable 2. Building 3. Cash 4. Equipment 5. Prepaid Insurance 6. Supplies

Financial And Managerial Accounting

Solutions

Financial And Managerial Accounting

Classifying assets

Identify each of the following as (A) a current asset or (B) property, plant, and equipment:

1. Accounts Receivable

2. Building

3. Cash

4. Equipment

5. Prepaid Insurance

6. Supplies

Explanation of Solution

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