Account Classification Flashcards
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Questions and Answers

What type of account is 'accounts receivable'?

  • Expense
  • Revenue
  • Liability
  • Asset (correct)

    • What type of account is 'equipment'?

  • Asset (correct)
  • Liability
  • Revenue
  • Expense

    • What type of account is 'cash'?

  • Liability
  • Asset (correct)
  • Expense
  • Revenue

    • What type of account is 'rent revenue'?

    <p>Revenue</p> Signup and view all the answers

    What type of account is 'rent expense'?

    <p>Expense</p> Signup and view all the answers

    What type of account is 'common stock'?

    <p>Stockholders' equity</p> Signup and view all the answers

    What type of account is 'advertising expense'?

    <p>Expense</p> Signup and view all the answers

    What type of account is 'retained earnings'?

    <p>Stockholders' equity</p> Signup and view all the answers

    What type of account is 'dividends'?

    <p>Liability</p> Signup and view all the answers

    What type of account is 'accounts payable'?

    <p>Liability</p> Signup and view all the answers

    What type of account is 'supplies'?

    <p>Asset</p> Signup and view all the answers

    Match the following accounts with their classifications:

    <p>Wages Expense = Expense Interest Revenue = Revenue Notes Payable = Liability Prepaid Insurance = Asset</p> Signup and view all the answers

    What type of account is 'land'?

    <p>Asset</p> Signup and view all the answers

    What type of account is 'utilities expense'?

    <p>Expense</p> Signup and view all the answers

    What type of account is 'cash short and over'?

    <p>Revenue (credit), Expense (debit)</p> Signup and view all the answers

    What type of account is 'gains on sale of equipment'?

    <p>Revenue</p> Signup and view all the answers

    Match the following accounts with their documents:

    <p>Wages Payable = Balance Sheet Interest Expense = Income Statement Treasury Stock = Balance Sheet Cash Dividends Payable = Balance Sheet</p> Signup and view all the answers

    Study Notes

    Accounts Overview

    • Assets: Resources owned by a company expected to provide future economic benefits.
    • Liabilities: Obligations or debts a company owes to outside parties.
    • Stockholders' Equity: The residual interest in the assets after liabilities are deducted, representing ownership in the company.

    Common Asset Types

    • Accounts Receivable: Amounts due from customers; listed as a debit on the balance sheet.
    • Equipment: Tangible assets used in operations; recorded as a debit on the balance sheet.
    • Cash: Liquid asset; essential for daily operations, listed as a debit.
    • Supplies: Consumables used in business operations, treated as an asset until used.
    • Inventory: Goods available for sale, classified as an asset and linked to cost of goods sold.
    • Prepaid Expenses: Payments made in advance for services or goods to be received later; treated as a current asset.

    Revenue and Expense Recognition

    • Rent Revenue: Income from leasing property; credited in income statements.
    • Rent Expense: Cost incurred for renting properties; a debit on the income statement.
    • Fees Earned: Income generated from providing services; credited in income statements.
    • Depreciation Expense: Allocation of equipment cost over its useful life; impacts income statements.

    Key Liabilities

    • Accounts Payable: Amounts owed to suppliers; a credit on the balance sheet indicating liabilities.
    • Unearned Revenue: Payment received before service is performed; classified as a liability until earned.
    • Wages Payable: Outstanding employee compensation; treated as a liability.
    • Customer Refunds Payable: Liabilities arising from expected returns.

    Stockholders' Equity Components

    • Common Stock: Equity shares representing ownership; credited on balance sheet.
    • Preferred Stock: Special equity shares offering specific rights; recorded as equity.
    • Retained Earnings: Cumulative profits retained in the business, reflects company growth; credited on balance sheets.
    • Dividends: Distribution of profits to shareholders; classified as a creditor's debit on the equity statement.

    Additional Expenses

    • Wages Expense: Total salary costs incurred; a debit on the income statement reflecting operational costs.
    • Advertising Expense: Money spent on promotional activities; recorded as a debit in income statements.
    • Utilities Expense: Costs for services like electricity and water; listed as a debit on income statements.
    • Interest Expense: Cost of borrowed funds; recorded as a debit impacting net income.

    Contra and Adjunct Accounts

    • Accumulated Depreciation: Cumulative depreciation recorded on assets, represented as a credit on the balance sheet.
    • Allowance for Doubtful Accounts: Estimation of receivables that may not be collected, classified as a contra asset.
    • Estimated Returns Inventory: Anticipated returns that retain value; an adjunct asset on the balance sheet.

    Miscellaneous Accounts

    • Cash Short and Over: Reflects discrepancies in cash; affects income statements as revenue or expense.
    • Treasury Stock: Company's own shares repurchased; treated as a contra equity account.
    • Product Warranty Payable: Liability for estimated future warranty claims; assessed based on sales projections.

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    Description

    Test your knowledge of essential accounting terminology with these flashcards. Covering key concepts such as accounts receivable, equipment, and common stock, this quiz will help reinforce your understanding of assets, revenues, and expenses. Perfect for accounting students or professionals looking to refresh their memory.

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