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 |
