Final Answer:
Indicate whether each of these items is an asset (A), a liability (L), or shareholders’ equity (SE):
(a) A - Accounts receivable
(b) L - Salaries payable
(c) A - Equipment
(d) A - Office supplies
(e) SE - Common shares
(f) L - Bank loan payable
(g) SE - Retained earnings
(h) A - Cash
Step-by-step explanation:
Assets (A) represent resources owned or controlled by a company that are expected to provide future economic benefits. "Accounts receivable" (a) and "Equipment" (c) are both assets. Accounts receivable indicates amounts owed to a company by customers for goods or services provided on credit. Equipment denotes tangible assets used for business operations.
Liabilities (L) are obligations or debts a company owes to external parties. "Salaries payable" (b) and "Bank loan payable" (f) are both liabilities. Salaries payable represents the wages owed to employees but not yet paid, while a bank loan payable signifies the company's obligation to repay borrowed funds.
Shareholders’ equity (SE) encompasses the residual interest in the assets of a company after deducting liabilities. "Common shares" (e) and "Retained earnings" (g) fall under shareholders’ equity. Common shares represent ownership in the company by shareholders, whereas retained earnings are the accumulated profits not distributed to shareholders as dividends.
Lastly, "Office supplies" (d) and "Cash" (h) are both considered assets. Office supplies represent tangible resources used in daily operations, while cash is a liquid asset used for transactions and meeting short-term obligations. Identifying and categorizing these items correctly aids in understanding a company's financial position and obligations.