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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

The Petty Cash account is a(n) __________.

  1. a. Liability
  2. b. Expense
  3. c. Asset
  4. d. Owner’s Equity
  5. e. Prepaid Account

To determine

Find the correct option, the option that does not describe the difference between the cash balance in the Cash account of the company, and the cash balance on the bank statement.

Explanation

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.

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

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