Question

Fill in the blanks with the category of the expanded accounting equation (assets, liabilities, stockholders' equity, dividends, revenues, expenses).
a. Inventory _________
b. Dividends _________
c. Utilities Payable _________
d. Accounts Payable _________
e. Retained Earnings _________
f. Cost of Goods Sold _________
g. Service Revenue _________
h. Rent Expense _________

Answer 1

Answer:

a. Inventory ⇒ Assets

Inventory are considered assets because they are owned by the business for the purpose of generating cash. They are to be sold within a period which makes them current assets.

b. Dividends ⇒ Dividends

Dividends are a share of the profits distributed to the shareholders of a company.

c. Utilities Payable ⇒ Liabilities

Utilities payable are liabilities because they reflect utilities for which the company has not paid. They are current because they must be paid within a period.

d. Accounts Payable ⇒ Liabilities

Accounts payable are companies that the company bought goods from on credit. These are current liabilities as well.

e. Retained Earnings ⇒ Stockholders' equity

Retained earnings are part of the profits that were not distributed to shareholders. They still belong to the shareholders however so they fall under Equity.

f. Cost of Goods Sold ⇒ Expenses

Cost of goods sold refer to the cost of making sales to earn revenue and so are expenses.

g. Service Revenue ⇒ Revenue

h. Rent Expense ⇒ Expenses

Rent expenses as implied, are expenses resulting from occupying a building that does not belong to the company. It is an income statement item.