Concept explainers
Asset:
Asset may be regarded as a resource for the person or entity which holds it with a specific economic value and the benefits derived from such asset are generally divided over the lifespan of such asset .Also, they are held to reap some future benefits on account of pooling the funds at present. An asset may be in tangible or intangible form depending upon the nature of asset.
Equity:
An ownership interest in any kind of security or it may also be regarded as the difference value of the assets held and liabilities against the said assets. Also, in the financial statement of the company the funds contributed by the owners and any of the retained or ploughed back earnings (or losses) are regarded as shareholder's equity.
Liability:
A liability may be regarded as the burden or it depicts the obligatory aspect related to a transaction and that it is to be fulfilled in the near future. They mainly form part of the financial statements so that the end users may analyze the current standing of the entity in terms of its liabilities against the possession of its assets.
To identify: (1) the type of account as an asset, liability, equity, revenue, or expense; (2) identify the normal balance of the account; and (3) enter debit (Dr.) or Credit (Cr.) to identify the kind of entry that would increase the account balance.
Want to see the full answer?
Check out a sample textbook solutionChapter 2 Solutions
FINANCIAL ACCT.FUND.(LOOSELEAF)
- Give what is required, For the Classification: (Classify the account if it is current/noncurrent asset; current/non-current liabilities; equity; revenue or expense); For the normal balance (answer whether the normal balance is a debit or credit) For the presentation (Classify whether a balance sheet or an income statement account). ACCOUNT CLASSIFICATION NORMAL BALANCE PRESENTATION OWNER’S DRAWING PETTY CASH FUND ACCOUNTS RECEIVABLE NOTES RECEIVABLE (6 MOS.) NOTES PAYABLE (2 YEARS) INTEREST EXPENSE BONDS PAYABLE UNEARNED INCOME ACCRUED EXPENSE PREPAID EXPENSE SUPPLIES COST OF GOOD SOLDS MERCHANDISE INVENTORY, END MERCHANDISE INVENTORY, BEG PATENT GOODWILL ADVANCES FROM CUSTOMERS ADVANCES TO SUPPLIERS…arrow_forwardestion A "receipt on account" results in a credit to: An A/P account Bank An A/R account Capitalarrow_forwardWhich item will appear on the credit side of the ledger account? a. Salary b. Drawings c. Service revenue d. Accounts receivablearrow_forward
- How is the account Accounts Payable classified and what kind of balance should it have? Group of answer choices current liability, debit current liability, credit revenue, debit revenue, creditarrow_forward“Credit card” (with an outstanding balance) would be which type of account? a.Proprietary b.Expense c.Current asset d.Current liability e.Incomearrow_forwardWhat is an account receivable? O a. Sales O b. Asset Oc. Income O d. Creditorsarrow_forward
- corresponding credit entry, what does this mean in Accounting? Select one: O a. Entry at two separate dates in a credit and cash transaction O b. Entry of omission and commission O c. The entry of two aspects of a financial transaction O d. The entry of the cost of both equity and liability transactionsarrow_forwardWhich item will appear on the credit side of ledger account? Select one: a. Rent expense b. Purchases c. Sales d. Cash receivedarrow_forwardWhich of the following accounts has a normal credit balance? a. Accounts Receivable b. Yura Wun, Capital X c. Supplies Expense d. Copyrightsarrow_forward
- Rules of debit and credit The following table summarizes the rules of debit and credit. For each of the items a through l, indicate whether the proper answer is a debit or a credit.arrow_forwardExplain what is meant by the term real accounts (also known as permanent accounts).arrow_forwardWill an accounts receivable balance increase with a debit or a credit entry? How do you know?arrow_forward
- Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,College Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College