Concept explainers
Equity Accounts: Equity Account comprises of items relating to the owner’s of the business. They include the common stock, retained earnings less dividends distributed.
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_forwardClassify 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_forwardWhich item will appear on the credit side of the ledger account? a. Salary b. Drawings c. Service revenue d. Accounts receivablearrow_forward
- A summarized statement of transactions relating to a particular person, item expense or income. a. invoice O b. voucher chart of accounts Cd. accountsarrow_forwardClassify each of the following accounts as either an asset (A), liability (L), or equity (EQ) account: _________ Note Receivable. __________ Accounts Payable.arrow_forwardClassify each of the following accounts as either an asset (A), liability (L), or equity (EQ) account: _________ Accounts Receivable. __________ Equipment.arrow_forward
- Which type of credit account is balanced in the last two columns of a worksheet? O A. Expense B. Revenue C. Accounts payable D. Accounts receivablearrow_forwardWhich of the following best describes the classification and normal balance of the accounts receivable account? Select one: a. Asset, Debit b. Liability, credit c. Revenue, credit d. Owner's equity, debitarrow_forwardIdentify the items from the following list that are likely to serve as source documents. Item a. Sales receipt b. Liability accounts c. Balance sheet d. Ledger e. Bank statement f. General journal g. Income statement h. Telephone bill i. Credit card receipt Is this a source document?arrow_forward
- Identify the items from the following list that are likely to serve as source documents. a. Sales receipt d. Prepaid insurance account g. Income statement b. Trial balance e. Invoice from supplier h. Bank statement c. Balance sheet f. Company revenue account i. Telephone billarrow_forwardIdentify the normal balance (debit [Dr] or credit [Cr]) for each of the following accounts: __________ Accounts Receivable. __________Equipment.arrow_forwardThe Purchases account in a general ledger: O a. js an asset account. O b. appears on the income statement. O c. appears on the balance sheet. O d. has a normal credit balance.arrow_forward
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