Chapter 2, Problem 2.3BP

(1)

To determine

Asset:

Assets refer to the resources owned by the business, which are utilized in the course of the business to generate revenue.

Liability:

Liabilities include the claims of the creditors on the assets of the business. The liability is the obligation of the business.

Stockholder’s equity:

Stockholder’s equity refers to the right the owner possesses over the resources of the business. Revenues and the expenses are the components of the owner’s equity.

Revenues:

Revenue refers to the income received from the business activity or sale of the output, during the accounting period.

Expenses:

Expenses refer to the cost incurred on the necessary purchases of the fixed assets by the firm, or the production of the goods and services, during the accounting period.

To Indicate: The type of account for each of the given accounts.

(2)

To determine

Normal balance:

Normal balance refers to the excess of amount on one side, over the amount on the other side in an account. The excess amount of debit side over the credit side is shown as the normal debit balance. The excess amount of credit side over the debit side is shown as the normal credit balance.

Type of account	Normal balance
Asset account	Debit balance
Liability account	Credit balance
Expense account	Debit balance
Revenue account	Credit balance
Retained earnings account	Credit balance
Dividend account	Debit balance

Table (2)

To Indicate: The type of account for each of the given accounts.