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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

Classify each of the accounts listed below as assets (A), liabilities (L), owner’s equity (OE), revenue (R), or expenses (E). Indicate the normal debit or credit balance of each account. Indicate whether each account will appear in the Income Statement columns (IS) or the Balance Sheet columns (BS) of the work sheet. Item 0 is given as an example.

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To determine

Indicate the account classification as A (assets), L (liabilities), OE (owners’ equity), R (revenue), or E (expenses), and the column of worksheet–IS (income statement) or BS (balance sheet), in which the adjusted balances of given accounts are recorded.

Explanation

Worksheet: Worksheet is an accounting tool that help accountants to record adjustments and up-date balances required to prepare financial statements. Worksheet is a central place where trial balance, adjustments, adjusted trial balance, income statement, and balance sheet are presented.

Indicate the account classification as A (assets), L (liabilities), OE (owners’ equity), R (revenue), or E (expenses), normal balance of the given accounts, and the column of worksheet–IS (income statement) or BS (balance sheet), in which the adjusted balances of given accounts are recorded.

AccountClassificationNormal BalanceIS or BS Columns
a.ADebitBS
b.LCreditBS
c.EDebitIS
d.OECreditBS
e.ACreditBS
f.OEDebitBS
g.RCreditIS
h.ADebitBS
i.EDebitIS
j.LCreditBS

Table (1)

Description:

  1. a. Prepaid Insurance is the cost incurred by a company in advance and would be treated as asset until the cost expires or the benefit is consumed. The asset value increases and an increase in asset is debited. So, it is recorded on the debit column of the balance sheet.
  2. b. Accounts Payable is the amount owed by the company, hence, is considered as a liability. The liability value increases and an increase in liability is credited. So, it is recorded on the credit column of the balance sheet...

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