l T o o s f o r i i i B u s n e s s D e c s o n M a k n g i i F n a n c a l i a c c o u n t n g 7e i This page is intentionally left blank ACCOUNT CLASSIFICATION AND PRESENTATION Financial Statement Normal Balance Account Title Classification A Current Liability Accounts Payable Current Asset Accounts Receivable Accumulated Depreciation Buildings Plant Asset Contra Accumulated Depreciation Equipment Plant Asset Contra Operating Expense Administrative Expenses Current Asset Contra Allowance for Doubtful Accounts Amortization Expense Operating Expense Balance Sheet Balance Sheet Balance Sheet Balance Sheet Income Statement Balance Sheet Income Statement Income Statement Balance Sheet Balance Sheet Balance Sheet Balance Sheet Balance Sheet Income Statement Operating Expense Long Term Liability Plant Assets Current Asset Stockholder s Equity Intangible Asset Cost of Goods Sold B C D F G Balance Sheet Income Statement Current Asset Long Term Investment Operating Expense Long Term Liability Contra Balance Sheet Other Income Temporary account closed to Retained Earnings Current Liability E Income Statement Retained Earnings Statement Balance Sheet Plant Asset Balance Sheet Operating Expense Income Statement Other Income Intangible Asset I Temporary account closed to Retained Earnings Income Tax Expense Current Liability Operating Expense Other Expense Current Liability Current Asset Other Income Current Asset Income Statement Balance Sheet Not Applicable Income Statement Balance Sheet Income Statement Income Statement Balance Sheet Balance Sheet Income Statement Balance Sheet 2 Credit Debit Credit Credit Debit Credit Debit Debit Credit Debit Debit Credit Debit Debit Debit Debit Debit Credit Debit Credit Debit Debit Credit Debit 1 Debit Credit Debit Debit Credit Debit Credit Debit Bad Debt Expense Bonds Payable Buildings Cash Common Stock Copyrights Cost of Goods Sold Debt Investments Depreciation Expense Discount on Bonds Payable Dividend Revenue Dividends Dividends Payable Equipment Freight Out Gain on Disposal of Plant Assets Goodwill Income Summary Income Tax Expense Income Taxes Payable Insurance Expense Interest Expense Interest Payable Interest Receivable Interest Revenue Inventory Financial Statement Normal Balance Account Title Land Loss on Disposal of Plant Assets Maintenance and Repairs Expense Mortgage Payable Notes Payable Patents Paid in Capital in Excess of Par Value Common Stock Paid in Capital in Excess of Par Value Preferred Stock Preferred Stock Premium on Bonds Payable Prepaid Insurance Prepaid Rent Classification L Plant Asset Other Expense M Operating Expense Long Term Liability N Current Liability Long Term Liability P Intangible Asset Stockholders Equity Balance Sheet Income Statement Income Statement Balance Sheet Balance Sheet Balance Sheet Balance Sheet Stockholders Equity Balance Sheet Stockholders Equity Balance Sheet Long Term Liability Contra Balance Sheet Balance Sheet Current Asset Current Asset Balance Sheet Rent Expense Retained Earnings Operating Expense Stockholders Equity Income Statement Balance Sheet and Retained Earnings Statement Salaries and Wages Expense Salaries and Wages Payable Sales Discounts Sales Returns and Allowances Sales Revenue Selling Expenses Service Revenue Stock Investments Supplies Supplies Expense Operating Expense Current Liability Revenue Contra Revenue Contra Revenue Operating Expense Revenue Current Asset Long Term Investment Current Asset Operating Expense Income Statement Balance Sheet Income Statement Income Statement Income Statement Income Statement Income Statement Balance Sheet Balance Sheet Income Statement Treasury Stock Stockholders Equity Balance Sheet Unearned Service Revenue Utilities Expense U Current Liability Operating Expense Balance Sheet Income Statement R S T Debit Debit Debit Credit Credit Debit Credit Credit Credit Credit Debit Debit Debit Credit Debit Credit Debit Debit Credit Debit Credit Debit Debit Debit Debit Credit Debit 1 The normal balance for Income Summary will be credit when there is a net income debit when there is a net loss The Income Summary account does not appear on any financial statement 2 If a periodic system is used Inventory also appears on the income statement in the calculation of cost of goods sold The following is a sample chart of accounts It does not represent a comprehensive chart of all the accounts used in this textbook but rather those accounts that are commonly used This sample chart of accounts is for a company that generates both service revenue as well as sales revenue It uses the perpetual approach to inventory If a periodic system was used the following temporary accounts would be needed to record inventory purchases Purchases Freight in Purchase Returns and Allowances and Purchase Discounts CHART OF ACCOUNTS Liabilities Notes Payable Stockholders Equity Common Stock Revenues Service Revenue Accounts Payable Paid in Capital in Sales Revenue Excess of Par Value Common Stock Sales Discounts Preferred Stock Allowances Paid in Capital in Interest Revenue Excess of Par Value Preferred Stock Gain on Disposal of Plant Assets Unearned Service Revenue Salaries and Wages Payable Interest Payable Dividends Payable Income Taxes Payable Bonds Payable Treasury Stock Retained Earnings Dividends Discount on Bonds Payable Income Summary Sales Returns and Bad Debt Expense Expenses Administrative Expenses Amortization Expense Cost of Goods Sold Depreciation Expense Freight Out Income Tax Expense Insurance Expense Interest Expense Loss on Disposal of Plant Assets Maintenance and Repairs Expense Rent Expense Salaries and Wages Expense Selling Expenses Supplies Expense Utilities Expense Assets Cash Accounts Receivable Allowance for Doubtful Accounts Interest Receivable Inventory Supplies Prepaid Insurance Prepaid Rent Land Accumulated Depreciation Equipment Buildings Accumulated Depreciation Buildings Copyrights Goodwill Patents Equipment Premium on Bonds Payable Mortgage Payable Paul D Kimmel PhD CPA University of Wisconsin Milwaukee Milwaukee Wisconsin Jerry J Weygandt PhD CPA University of Wisconsin Madison Madison Wisconsin Donald E Kieso PhD CPA Northern Illinois University DeKalb Illinois Dedicated to the Wiley sales representatives who sell our books and service our adopters in a professional and ethical manner and to Enid Merlynn and Donna Vice President Executive Publisher Associate Publisher Editorial Operations Manager Content Editor Associate Editor Senior Development
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