Question

From the dropdown box beside each numbered balance sheet item, select of its balance sheet classification.

Account Title Classification
1. Prepaid rent (2 months of Rent) 11. Mortgages payable (due in 6 years)
2. Equipment 12. Automobiles
3. Repairs expense 13. Notes payable (due in 3 years)
4. Land (used in operations) 14. Land held for future expansion
5. Depreciation expense -Building 15. Notes payable (due in 2 months)
6. Office equipment 16. Notes receivable (due in 2 years)
7. Common stock 17. Interest paya ble (due in 1 week)
8. Buildings 18. Long-term investment in stock
9 Bonds payable (due in 10 years) 19. Wages payable
10. Accumulated depreciation-Trucks 20. Office supplies
A. Current assets
B. Long-term investments
C. Plant assets
D. Intangible assets
E. Current liabilities
F. Long-term liabilities
G. Equity

Answer 1

Balance Sheet Classifications:

Account Title Classification

1. Prepaid Rent Prepaid Rent Current Assets

2. Equipment Property, Plant, & Equipment Plant Assets

4. Land Land Long-term assets

5. Land Land Long-term assets

6. Office Equipment Property, Plant & Equipment Plant Assets

7. Common Stock Common Stock Equity

8. Buildings Property, Plant & Equipment Plant Assets

9. Bonds Payable 10-year Bonds Payable Long-term Liabilities

10. Accumulated Depreciation -Truck Contra account to Long-term assets

11. Mortgages Payable 6-year Mortgages Long-term liabilities

12. Automobiles Automobiles Long-term assets

13. Notes payable 3-year Notes Payable Long-term liabilities

14. Land Land Long-term assets

15. Notes payable 2-month Notes Payable Current liabilities

16. Notes Receivable 2-year Notes Receivable Long-term assets

17. Interest Payable Interest Payable Current liabilities

18. Long-term investment in stock Long-term investments

19. Wages Payable Wages Payable Current liabilities

20. Office Supplies Office Supplies Current assets

Step-by-step explanation:

a) Current assets are short-term financial resources owned by the entity from which economic benefits will accrue. They are mainly used as working capital to generate more revenue.

b) Long-term investments are investments in securities like bonds and stock held by the entity to generate interests and dividends.

c) Plant assets are property, plants, and equipment which are non current assets being used for the long-term in the running of the business, e.g. building.

d) Intangible assets are assets which are not physical in nature. Examples of intangible assets are patents and copyrights, mining rights, and intellectual property.

e) Current liabilities are financial obligations of the entity which must be settled with financial resources within a calendar year or less. Examples: Wages Payable, Accounts Payable, and Unearned Revenue.

f) Long-term liabilities are liabilities (financial obligations) which an entity settles with financial resources that can last for more than a calendar year. Examples included Bonds, Notes, and other payables which are not current.

g) Equity refers to the ownership interest in an entity. This is what the owners of the business are entitled when other creditors have been settled. It is made of contributed capital and retained earnings.