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

Answer:

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

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.