Question

Which of the following accounts would be an example of an asset, liability, revenue, expense, or stockholders' equity account?

1) Salaries Payable - Liability
2) Cost of Sales - Expense
3) Common Stock - Stockholders' Equity
4) Investment in Securities - Asset
5) Fees Earned - Revenue

Answer 1

Salaries Payable is a liability account, Cost of Sales is an expense account, Common Stock is a stockholders' equity account, Investment in Securities is an asset account, and Fees Earned is a revenue account. It reflects the company's ownership of securities, such as stocks or bonds, that are expected to generate future economic benefits.

Step-by-step explanation:

The following accounts can be classified as:

1. Salaries Payable - Liability
2. Cost of Sales - Expense
3. Common Stock - Stockholders' Equity
4. Investment in Securities - Asset
5. Fees Earned - Revenue

Common Stock is a stockholders' equity account. It represents the ownership interest that shareholders have in a company. When investors purchase common stock, they become shareholders and contributors to the equity of the company. Investment in Securities is an asset account. It reflects the company's ownership of securities, such as stocks or bonds, that are expected to generate future economic benefits. It represents an investment made by the company. Fees Earned is a revenue account. It represents the income earned by a company from providing services. Revenue accounts capture the company's earnings from its primary business activities. Cost of Sales is an expense account. It includes the direct costs associated with producing goods or services that a company sells. It is subtracted from revenue to calculate gross profit. Salaries Payable is a liability account. It represents the amount of salaries that a company owes to its employees but has not yet paid. It reflects an obligation to pay in the future, making it a liability.