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24 October, 21:08

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

(a) Retained earnings select a category of elements of financial statements

(b) Sales select a category of elements of financial statements

(c) Additional paid-in capital select a category of elements of financial statements

(d) Inventory select a category of elements of financial statements

(e) Depreciation select a category of elements of financial statements

(f) Loss on sale of equipment select a category of elements of financial statements

(g) Interest payable select a category of elements of financial statements

(h) Dividends select a category of elements of financial statements

(i) Gain on sale of investment select a category of elements of financial statements

(j) Issuance of common stock

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Answers (1)
  1. 24 October, 21:09
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    Answer: (a) Retained earnings = Equity.

    (b) Sales = Revenues.

    (c) Additional paid-in capital = Equity.

    (d) Inventory = Assets.

    (e) Depreciation = Expenses.

    (f) Loss on sale of equipment = Losses.

    (g) Interest payable = Liability.

    (h) Dividends = Dividends payable are a liability. Dividends paid are a decrease in the accumulated results of the company as they are distributed to the owners.

    (i) Gain on sale of investment = Gains.

    (j) Issuance of common stock = are investments by the owners that become part of the capital.
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