Classification of accounts Asset: Assets refer to the resources owned by the business, which are utilized in the course of the business to generate revenue. The following belong to the assets account: Accounts Receivable Prepaid Cash Land Supplies Liability: Liabilities include the claims of the creditors on the assets of the business. The liability is the obligation of the business. The following belong to the liabilities account: Accounts Payable Salaries payable Notes payable Income tax payable Unearned rent Revenue: Revenue is known as “Top line” because it appears very top on the income statement of the company. It is used to imply profits or net income (bottom line) of the company by subtracting the total expenses from total revenues. The following belong to the revenue account Rent revenue Fees earned Service revenue Expense: Expense is the cost borne by a company to produce and sell the goods and services to the customers. The following belong to the expense account Salaries expense Insurance expense Supplies expense Utilities expense Depreciation expense To Identify: Each account would appear as (a) assets, (b) liabilities, (c) revenue or (d) expense.

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Chapter 4, Problem 4.2EX

To determine

Classification of accounts

Asset: Assets refer to the resources owned by the business, which are utilized in the course of the business to generate revenue. The following belong to the assets account:

Accounts Receivable

Prepaid

Cash

Land

Supplies

Liability: Liabilities include the claims of the creditors on the assets of the business. The liability is the obligation of the business. The following belong to the liabilities account:

Accounts Payable

Salaries payable

Notes payable

Income tax payable

Unearned rent

Revenue: Revenue is known as “Top line” because it appears very top on the income statement of the company. It is used to imply profits or net income (bottom line) of the company by subtracting the total expenses from total revenues. The following belong to the revenue account

Rent revenue

Fees earned

Service revenue

Expense: Expense is the cost borne by a company to produce and sell the goods and services to the customers. The following belong to the expense account

Salaries expense

Insurance expense

Supplies expense

Utilities expense

Depreciation expense

To Identify: Each account would appear as (a) assets, (b) liabilities, (c) revenue or (d) expense.

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Bigco Corporation is one of the nation's leading distributors of food and related products to restaurants, universities, hotels, and other customers. A simplified version of its recent income statement contained the following items (in millions). Cost of sales es Interest expense Income taxes Net earnings Sales Earnings before income taxes Selling, general, and administration expense Other revenues Total expenses (excluding income taxes) Total revenues $ 11,601 249 39 1,378 16,330 1,627 3,493 430 15,133 16,760 Prepare an income statement for the year ended June 30, current year. (Hint: First order the items as they would appear on the income statement and then confirm the values of the subtotals and totals.) Note: Enter your answers in millions rather than in dollars (for example, 5,000 million should be entered as 5,000 rather than 5,000,000). Revenues: Total revenues Expenses: BIGCO CORPORATION Income Statement (in millions) $ 0