Question

Problem 1-2A Assign account classifications (LO1-2) Account classifications include assets, liabilities, stockholders' equity, dividends, revenues, and expenses. Required: For each transaction, select whether the related account would be classified in the balance sheet as an asset, a liability, or stockholders' equity; in the income statement as a revenue or an expense; or in the statement of stockholders' equity as a dividend. Account Classifications Accounts Related Transactions 1. Common stock Sale of common stock to investors. 2. Equipment Equipment used for operations. 3. Salaries payable Amounts owed to employees. 4. Service revenue Sales of services to customers. 5. Utilities expense Cost of utilities 6. Supplies Purchase of office supplies. 7. Research and development expense cost of research and development 8. Land Property used for operations. 9. Income tax payable Amounts owed to the IRS for taxes. 10. Interest payable Amount of interest owed on borrowing.

Answer 1

classification

	Accounts	Related transaction	Account classification
1	Common stock	Sale of common Stock to investors	Stockholder's equity in balance sheet
2	Equipment	Equipment used for operation	Assets in balance sheet
3	Salaries payable	Amounts owed to employees	Liabilities in balance sheet
4	Service revenue	Sales of services to customers	Revenue in income statement
5	Utilities expense	Cost of utilities	expense in income statement
6	Supplies	Purchase of office supplies	Assets in balance sheet
7	Research and development expense	cost of research and development	expense in income statement
8	Land	Property used for operations	asset in balance sheet
9	Income tax payable	Amounts owed to the IRS for taxes	Liabilities in balance sheet
10	Interest payable	Amount of interest owed on borrowing	Liabilities in balance sheet