Question

From the dropdown box beside each numbered balance sheet item, select the letter of its balance sheet classification. If the item should not appear on the balance sheet, choose the letter Z from the selection choices.
a. Current assets
b. Long-term investments
c. Plant assets
d. Intangible assets
e. Current liabilities
f. Long-term liabilities
g. Equity


1. Prepaid rent
2. Taxes payable
3. Account payable
4. Automobiles

Answer 1

Answer:

1. Prepaid rent             :     a. Current assets

2. Taxes payable        :     e. Current liabilities

3. Account payable    :     e. Current liabilities

4. Automobiles          :     b. Long-term investments

Explanation:

Balance Sheet items include :

1. Assets - Economic Resources of the Entity that would result in future cash inflow
2. Liabilities - Present obligations of the entity that will result in future cash outflow
3. Equity - Residue After removing Liabilities from the Assets or Shareholders entitled interest.