Final answer:
Items such as an Apple iPad, Accounts Receivable, Cash, and Office Equipment are classified as assets, while Accounts Payable is a liability and B. James, Capital is considered owner's equity. The balance sheet displays these along with net worth to show a company's financial standing.
Step-by-step explanation:
Classification of Items as Assets, Liabilities, or Owner's Equity
When classifying items on a balance sheet, it's important to differentiate between assets, liabilities, and owner's equity. Here is how the items mentioned would be classified:
a. Apple iPad: Asset (A) - It's an item of value that the firm or individual owns.
- b. Accounts Receivable: Asset (A) - Represents money owed to the company by customers; thus, it's an asset.
- c. Accounts Payable: Liability (L) - These are debts the company must pay to others, categorizing it as a liability.
- d. Cash: Asset (A) - It is coins and currency in circulation that a company has immediate access to, making it an asset.
- e. B. James, Capital: Owner's Equity (OE) - Reflects the owner's total investment into the company.
- f. Office Equipment: Asset (A) - As part of the company's property that is used in operations, it's an asset.
The balance sheet is an accounting tool that lists assets and liabilities to determine a company's net worth or bank capital. An asset is something of value the firm owns, while a liability is something the firm owes. The difference between total assets and total liabilities is the owner's equity or the net worth of a firm.