Concept explainers
Equity Accounts: Equity Account comprises of items relating to the owner’s of the business. They include the common stock,
Liability: Liabilities represent the amount which the business owes to outsiders. Examples of liabilities include bank loans, notes payable, accounts payable, outstanding expenses payable.
Assets: Assets are the resources available to the business from which it will derive future economic benefits. Examples of asset are Land, Building, Plant and Machinery, Cash, Accounts Receivable, Prepaid expenses, Inventory.
Revenue: Revenue means the income generated from sale of goods or services. There may be other revenues also like rent received, Interest, Royalties and fees. Revenues would imply an inflow of cash or assets into the business
Expense: Expenses mean the costs incurred in carrying out the operations of the business during a specified period. Expenses involve outflow of cash or assets out of the business.
To classify:
The given accounts in desired categories.
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Managerial Accounting
- Classify each of the accounts listed below as assets (A), liabilities (L), owners 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.arrow_forwardFINANCIAL STATEMENT ACCOUNTS Label each of the following accounts as an asset (A), liability (L), owners equity (OE), revenue (R), or expense (E). Indicate the financial statement on which the account belongsincome statement (IS), statement of owners equity (SOE), or balance sheet (BS)in a format similar to the following.arrow_forwardList the classification of each of the following accounts as A (asset), L (liability), OE (owners equity), R (revenue), or E (expense). Write Debit or Credit to indicate the increase side, the decrease side, and the normal balance side.arrow_forward
- FINANCIAL STATEMENT ACCOUNTS Label each of the following accounts as an asset (A), liability (L), owners equity (OE), revenue (R), or expense (E). Indicate the financial statement on which the account belongsincome statement (IS), statement of owners equity (SOE), or balance sheet (BS)in a format similar to the following.arrow_forwardWhich of the following accounting records is the main source of information used to prepare the financial statements? A. journal entries B. T-accounts C. trial balance D. chart of accountsarrow_forwardIdentify the financial statement on which each of the following accounts would appear: the income statement (IS), the retained earnings statement (RE), or the Balance Sheet (BS). A. Insurance Expense B. Accounts Receivable C. Office Supplies D. Sales Revenue E. Common Stock F. Notes Payablearrow_forward
- From the following list, identify which items are considered original sources: A. prepaid insurance B. bank statement C. sales ticket D. general journal E. trial balance F. balance sheet G. telephone bill H. invoice from supplier I. company sales account J. income statementarrow_forwardLabel each of the following accounts as asset (A), liability (L), owners equity (OE), revenue (R), or expense (E). a. Supplies b. Professional Fees c. Prepaid Insurance d. M. Jones, Drawing e. Accounts Payable f. Service Income g. M. Jones, Capital h. Office Equipment i. Accounts Receivable j. Salary Expensearrow_forwardIndicate whether each of the following accounts has a normal debit or credit balance. A. prepaid landscaping expense B. common stock C. delivery vans D. maintenance expense E. retained earnings F. office supplies G. revenue earned H. accounts payable I. unearned painting revenue J. interest payablearrow_forward
- Indicate on which financial statement the following accounts (from the adjusted trial balance) would appear: (A) Sales Revenue; (B) Unearned Rent Revenue; (C) Prepaid Advertising; (D) Advertising Expense; (E) Dividends; (F) Cash.arrow_forwardIdentify the normal balance (Dr for Debit; Cr for Credit) and type of account (A for asset, L for liability, E for equity, E-rev for revenue, E-exp for expense, and E-eq for equity) for each of the following accounts. Table 3.24arrow_forwardA revenue account will begin with the number ________ in the chart of accounts. (a) 1 (b) 2 (c) 3 (d) 4arrow_forward
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