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College Accounting (Book Only): A ...

13th Edition
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ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

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

Determine on which financial statement each account listed below is reported. Use the following abbreviations: Income Statement (IS), Statement of Owner’s Equity (OE), and Balance Sheet (BS).

  1. a. M. James, Capital
  2. b. Cash
  3. c. Rent Expense
  4. d. Accumulated Depreciation, Equipment
  5. e. Wages Payable
  6. f. M. James, Drawing
  7. g. Equipment
  8. h. Office Supplies
  9. i. Depreciation Expense
  10. j. Office Supplies
  11. k. Income from Services
  12. l. Accounts Receivable

To determine

Indicate the financial statement as IS (income statement), OE (statement of owners’ equity), or BS (balance sheet), in which the balances of given accounts are recorded.

Explanation

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.

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.

Balance sheet: This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and owners (owners’ equity) over those resources. The resources of the company are assets which include money contributed by owners and creditors. Hence, the main elements of the balance sheet are assets, liabilities, and owners’ equity.

Assets: These are the resources owned and controlled by business and used to produce benefits for the company. Assets are classified on the balance sheet as current assets, non-current assets, property, plant, and equipment, and intangible assets.

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 and suppliers. Liabilities are classified on the balance sheet as current liabilities and long-term liabilities.

Owners’ equity: The financial interest of the owners to invest in the business is referred to as owners’ equity or capital. These are the claims of owners or stockholders on a company’s resources after the liabilities are paid off.

Revenues: Revenues are earnings from operations of a business. A business earns revenue by selling goods and services, rent revenue, and interest income.

Expenses: Expenses are costs incurred for the operations of a business...

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