ACCT 2121 Account Classification and Presentation

Everything Professor K made a note on

Accounts payable (A/P)

Current Liability / Balance sheet / Credit

Accounts receivable (A/R)

Current Asset / Balance sheet / debit

Accumulated depreciation

Plant asset/Long-term asset - Contra / balance sheet / Credit

Allowance for doubtful accounts (ADA)

Current Asset - Contra / Balance Sheet / Credit

Bad debt expense (BDE)

Operating expense / income statement / Debit

Bonds Payable (B/P)

Long-term liability / Balance sheet / credit

Common Stock (C/S)

Stockholder’s equity / balance sheet / credit

Cost of goods sold (COGS)

Expense / income statement / debit

Discount on bonds payable

Long-term liability - Contra / Balance sheet / Debit

Dividends (DIV)

Temporary account closed to retained earnings / Statement of retained earnings / Debit

Goodwill (GW)

Intangible asset / balance sheet / debit

Notes payable (N/P)

Current liability OR Long-term liability / Balance sheet / Credit

Paid-in Capital in Excess of Par (APIC:C/S or APIC: P/S)

Stockholders’ Equity / Balance sheet / Credit

Preferred Stock (P/S)

Stockholders’ Equity / Balance sheet / credit

Prepaid expenses

Current asset / Balance sheet / Debit

Retained Earnings (RE)

Stockholders’ Equity / Balance sheet and statement of retained earnings / Credit

Salaries and Wages expense (S&W Exp.)

Operating expense / Income statement / Debit

Sales Discounts

Revenue - Contra / Income statement / debit

Sales returns and allowances

Revenue - Contra / Income statement / Debit

Treasury Stock (T/S)

Stockholder’s Equity - Contra / Balance sheet / Debit

Unearned service revenue

Current liability / Balance sheet / credit

All “payables” are…

Liabilities

All “receivables” are…

Assets

What is the effect of the adjective “prepaid” on an expense account?

The account is converted from an expense to an asset, and occurs on the balance sheet rather than the income statement.

What is the effect of the adjective “unearned” on a revenue account?

The account is converted from a revenue to a liability, and occurs on the balance sheet rather than the income statement.

How long must an asset or liability be possessed to be considered a long-term asset (LTA) or long-term liability (LTL)?

Greater than or equal to a year.

How long must an asset or liability be possessed to be considered a current asset (CA) or current liability (CL)?

Less than a year.

Examples of assets:

1. Cash (CA)

2. All receivables (CA)

3. Allowance for doubtful accounts (CA)

4. Inventory (CA)

5. Supplies (CA)

6. Prepaid insurance/rent/other expenses (CA)

7. Land (LTA; plant asset)

8. Equipment (LTA; plant asset)

9. Accumulated depreciation (Contra-Asset)

10. Buildings (LTA; plant asset)

11. Copyrights (LTA; intangible asset)

12. Goodwill (LTA; intangible asset)

13. Patents (LTA; intangible asset)

Examples of liabilities:

1. Notes payable (CL or LTL)

2. Accounts payable (CL)

3. Unearned service revenue (CL or LTL)

4. Interest payable (CL)

5. Dividends payable (CL)

6. Income taxes payable (CL)

7. Bonds payable (CL or LTL)

8. Discount on bonds payable (Contra-Liability)

9. Premium on bonds payable (Contra-Liability)

10. Mortgage payable

Examples of stockholders’ equity:

1. Common stock (C/S)

2. Paid in Capital in Excess of PAR (APIC: C/S or APIC: P/S)

3. Preferred stock (P/S)

4. Treasury stock (T/S)

5. Retained earnings (RE)

6. Dividends (DIV)

7. Income summary

Examples of revenues:

1. Service revenue

2. Sales revenue

3. Sales discounts (Contra-Revenue)

4. Sales returns and allowances (Contra-Revenue)

5. Interest revenue

6. Gain on disposal of plant asset

Examples of expenses:

1. Administrative expenses

2. Amortization expense

3. Bad debt expense

4. Cost of Goods sold (COGS)

5. Depreciation expense

6. Freight-out

7. Income tax expense

8. insurance expense

9. Interest expense

10. Loss on disposal of plant assets

11. maintenance and repairs expense

12. rent expense

13. salaries and wages expense

14. selling expenses

15. supplies expense

16. utilities expense

What is the normal balance of an asset?

Debit

What is the normal balance of a liability?

Credit

What is the normal balance of stockholders’ equity?

Credit

What is the normal balance of a revenue account?

Credit

What is the normal balance of an expense account?

Debit

What is the normal balance of dividends?

Debit

What is the normal balance of a contra-asset account?

Credit (opposite of a normal asset account)

What is the normal balance of a contra-liability account?

Debit (opposite of a normal liability account)

What is the normal balance of a contra-equity account?

Debit (opposite of a normal equity account)

What is the normal balance of a contra-revenue account?

Debit (opposite of a normal revenue account)

What is the normal balance of a contra-expense account?

Credit (opposite of a normal expense account)