Question

Classify each of these items as an asset, liability, or stockholders equity.

1. Accounts receivable
2. Accounts payable
3. Common stock
4. Supplies
5. Retained earnings
6. Cash
7. Notes payable
8. Equipment

Answer 1

Accounts Receivable, Supplies, Cash, and Equipment are classified as assets; Accounts Payable and Notes Payable as liabilities; and Common Stock and Retained Earnings as stockholders' equity.

Step-by-step explanation:

Classification of Financial Statement Items

To classify each of the listed items as an asset, liability, or stockholders equity, it's important to understand their definitions:

• Assets are items of value that a firm or individual owns and can be used to produce something.
• Liabilities are debts or something that a firm or individual owes.
• Stockholders' Equity represents the owners' claim to the assets of a business after all liabilities have been paid off and is part of a company's net worth or bank capital.

With these definitions in mind, let's classify each item:

1. Accounts Receivable - Asset
2. Accounts Payable - Liability
3. Common Stock - Stockholders' Equity
4. Supplies - Asset
5. Retained Earnings - Stockholders' Equity
6. Cash - Asset
7. Notes Payable - Liability
8. Equipment - Asset