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Elements of accounting
Exercises (answers)

Checked for updates, April 2022.


Here are the answers to the exercises on Elements of Accounting. If you need help with the topic, you can always visit the lessons anytime.

A. For each item, indicate whether it is an Asset, a Liability, or Capital. Then, if it is an asset or a liability, indicate if it is Current or Non-current in Column B. If it is capital, place N/A.

  A B
1. Tools and equipment Asset Non-current
2. Salaries payable Liability Current
3. Additional investment of owner Capital N/A
4. Cash on hand Asset Current
5. Cash deposited in Prime Bank Asset Current
6. Delivery truck Asset Non-current
7. Obligation to pay supplier Liability Current
8. Loan from bank, 5 years Liability Non-current
9. Investment in long-term bonds Asset Non-current
10. Prepaid insurance Asset Current
11. Patent (an intangible) Asset Non-current
12. Withdrawals made by owner Capital N/A
13. Merchandise for sale Asset Current
14. Building used as office space Asset Non-current
15. Accounts receivable Asset Current

B. For each item, indicate whether it is an Income or an Expense. If it is neither income nor expense, write its proper classification.

1. Rent revenue Income
2. Rent payable Liability
3. Salaries of employees Expense
4. Sales Income
5. Light, water, and electricity Expense
6. Loss from flood Expense
7. Accumulated depreciation Contra-asset
8. Prepaid advertising Asset
9. Delivery costs Expense
10. Gain on sale of land Income

C. For each of the following accounts, indicate whether it is an Asset, Liability, Income, or Expense. If it is an asset or a liability, specify whether it is current or non-current.

1. Merchandise Inventory Asset Current
2. Accounts Payable Liability Current
3. Utilities Expense Expense
4. Service Revenue Income
5. Computer Equipment Asset Non-current
6. Office Supplies Asset Current
7. Bonds Payable Liability Non-current
8. Land Asset Non-current
9. Cash Asset Current
10. Furniture and Fixtures Asset Non-current
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