Question

For each item below, indicate to which category of elements of financial statements it belongs. (a) Dividends select a category (b) Interest receivable select a category (c) Issuance of preferred stock select a category (d) Prepaid insurance select a category (e) Amortization select a category (f) Cost of goods sold select a category (g) Accounts payable select a category (h) Cash select a category (i) Equipment select a category (j) Gain on sale of equipment

Answer 1

Dividends belong to Shareholder's Equity, Interest Receivable is an Asset, Issuance of Preferred Stock is Shareholder's Equity, Prepaid Insurance is an Asset, Amortization is an Expense, Cost of Goods Sold is an Expense, Accounts Payable is a Liability, Cash is an Asset, Equipment is an Asset, and Gain on Sale of Equipment is Revenue.

Step-by-step explanation:

For each item below, I've indicated to which category of elements of financial statements it belongs:

• (a) Dividends: Shareholder's Equity (distributions to shareholders)
• (b) Interest receivable: Asset (specifically a Current Asset)
• (c) Issuance of preferred stock: Shareholder's Equity (source of equity financing)
• (d) Prepaid insurance: Asset (specifically a Current Asset, representing future economic benefits)
• (e) Amortization: Expense (reduction in value of intangible assets)
• (f) Cost of goods sold: Expense (cost of sales or services provided)
• (g) Accounts payable: Liability (specifically a Current Liability, obligations due to suppliers)
• (h) Cash: Asset (specifically a Current Asset, liquid resources)
• (i) Equipment: Asset (specifically a Noncurrent or Fixed Asset, used over multiple periods)
• (j) Gain on sale of equipment: Revenue (increases in economic benefits during the accounting period)