Question

Classify each of the following financial statement items based upon the major balance sheet classifications. select a major balance sheet classification Prepaid advertising select a major balance sheet classification Equipment select a major balance sheet classification Trademarks select a major balance sheet classification Salaries and wages payable select a major balance sheet classification Income taxes payable select a major balance sheet classification Retained earnings select a major balance sheet classification Accounts receivable select a major balance sheet classification Land (held for future use) select a major balance sheet classification Patents select a major balance sheet classification Bonds payable select a major balance sheet classification Common stock select a major balance sheet classification Accumulated depreciation—equipment select a major balance sheet classification Unearned sales revenue select a major balance sheet classification Inventor

Answer 1

Answer:

Prepaid Advertising - Current Asset

Equipment - Property, Plant, and Equipment

Trademarks - Intangible Assets

Salaries and Wages payable - Current Liabilities

Income Tax payable - Current Liabilities

Retained Earnings - Stockholder's Equity

Account Receivable - Current Assets

Land (Held for future use) - Long term Investment

Patents - Intangible Asset

Bonds Payable - Long term Liability

Common Stock - Stockholder's Equity

Accumulated Depreciation -  Property, Plant, and Equipment

Unearned sales revenue - Current Liability

Explanation:

Balance Sheet of a company has different heads under which items are classified according to their nature. The major account heads for classification are Assets, Liabilities and Equity.

Prepaid Advertising and Account receivable are classified as current asset because this is expected to be used within a year.

Equipment is classified as Long term asset under the head, Property, Plant and Equipment. The equipment has estimated useful life more than a year then it is classified as Long term asset.

Trademarks and patents are classified as intangible assets, because they are not physical in nature.

Salaries and Wages payable, Income Tax payable and Unearned sales revenue are classified as Current liabilities. These expenses are due to pay within a year.

Retained Earnings and Common Stock are classified as Stockholders equity. The amount after subtracting all liabilities from total assets is referred to as Stockholder equity.

Accumulated depreciation is deducted from Property, Plant and Assets. This has negative sign and is a contra asset account.