BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

Solutions

Chapter
Section
BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
1 views

Flow of accounts into financial statements

The balances for the accounts that follow appear in the Adjusted Trial Balance columns of the end-of-period spreadsheet. Indicate whether each account would flow into the income statement, statement of owner's equity, or balance sheet.

1. Accounts Payable

2. Accounts Receivable

3. Cash

4. Danny Reacher, Drawing

5. Fees Earned

6. Supplies

7. Unearned Rent

8. Utilities Expense

9. Wages Expense

10. Wages Payable

To determine

Financial Statement: It refers to the complete record of the financial transactions of the Company. It provides financial information to its users.

The four types of financial statements are as follows:

  1. 1. Income statement: The 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 is referred to as income statement.
  2. 2. Statement of owners’ equity: This statement reports the beginning owner’s equity and all the changes, which led to ending owners’ equity. Additional capital, net income from income statement is added to and drawings is deducted from beginning owner’s equity to arrive at the end result, ending owner’s equity.
  3. 3. 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.
  4. 4. Statement of cash flows: This statement reports all the cash transactions that are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period.

To Indicate: Whether each account would flow into the income statement, statement of owners’ equity or balance sheet.

Explanation

Accounts payable is a liability account. Therefore, it will appear in the liability side of the balance sheet.

Accounts receivable is a current asset account. Therefore, it will appear in the asset side of the balance sheet.

Cash is a current asset account. Therefore, it will appear in the asset side of the balance sheet.

Drawing is a component of owners’ equity account. Therefore, it will appear on the statement of owners’ equity. This account helps to calculate the ending balance of owners; equity.

Fees earned are a revenue account and to calculate the net income, the total expenses are deducted from the total revenue. Therefore, it will appear in the income statement...

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

What is a three-way match?

Accounting Information Systems

Why cant the Fed control the money supply perfectly?

Principles of Economics (MindTap Course List)

RETURN ON EQUITY Midwest Packagings ROH last year was only 3%; but its management has developed a new operating...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

What are the two main causes of market failure? Give an example of each.

Principles of Microeconomics (MindTap Course List)

Explain why profit-linked productivity measurement is important.

Cornerstones of Cost Management (Cornerstones Series)