Q1SE - Horngren'S Financial And Managerial Accounting

Question

Identifying accounts Consider the following accounts and identify each account as an asset (A), liability (L), or equity (E). a. Notes Receivable b. Common Stock c. Prepaid Insurance d. Notes Payable e. Rent Revenue f. Taxes Payable g. Rent Expense h. Furniture i. Dividends j. Unearned Revenue

Step-by-Step Solution

Answer

Identification of accounts

Accounts	Assets (A), liability (L), and Equity (E)
Notes receivables	Assets (A)
Common Stock	Equity (E)
Prepaid Insurance	Assets (A)
Notes Payable	Liabilities (L)
Rent Revenue	Equity (E)
Taxes Payable	Liabilities (L)
Rent Expense	Equity (E)
Furniture	Assets (A)
Dividends	Equity (E)
Unearned Revenue	Liabilities (L)

Step 1: Meaning of Assets

Assets are the property of the business, and the assets benefit the business in the future. Examples of assets are land, building, cash etc.

Step 2: Meaning of liabilities

Liabilities are the amount that needs to be payable by the business in the future. Examples are creditors, outstanding salary etc.

Step 3: Meaning of equity

Equity refers to the amount which the owner invests in the business.