Question

For each of the following item below, indicate to which category of elements of financial statements it belongs.

a. Retained earnings. e. Depreciation h. Dividends

b. Sales f. Loss on Sale of equipment i. Gain on sale of investment

c.Additional paid-in capital g. Interest payable j. Issuance of common stock

d. inventory

Answer 1

Step-by-step explanation:

As we know that

The statement of stockholder's equity includes common stock and retained earnings.

The net income is a difference between the total revenues and total expenses

The assets, liabilities and stockholders ' equity are reported in the balance sheet

So, the categorization is shown below:

a. Retained earnings = Equity

b. Sales = Revenues and shown in the income statement

c. Additional paid-in capital = Equity

d. Inventory = Current assets

e. Depreciation = Expense and shown in the income statement

f. Loss on Sale of equipment = Losses

g. Interest payable = Current liabilities

h. Dividends = Shown in the retained earning statement in a negative amount

i. Gain on sale of investment = Gains

j. Issuance of common stock = Owners investment