Equity Accounts: Equity Account comprises of items relating to the owner’s of the business. They include the common stock, retained earnings less dividends distributed. Liability: Liabilities represent the amount which the business owes to outsiders. Examples of liabilities include bank loans, notes payable, accounts payable, outstanding expenses payable. Assets: Assets are the resources available to the business from which it will derive future economic benefits. Examples of asset are Land, Building, Plant and Machinery, Cash, Accounts Receivable , Prepaid expenses, Inventory. Revenue: Revenue means the income generated from sale of goods or services. There may be other revenues also like rent received, Interest, Royalties and fees. Revenues would imply an inflow of cash or assets into the business Expense: Expenses mean the costs incurred in carrying out the operations of the business during a specified period. Expenses involve outflow of cash or assets out of the business. To classify: The given accounts in desired categories.

Question

Want to see the full answer?

Answer 1

Question

Chapter D, Problem 3QS

To determine

Equity Accounts: Equity Account comprises of items relating to the owner’s of the business. They include the common stock, retained earnings less dividends distributed.

Liability: Liabilities represent the amount which the business owes to outsiders. Examples of liabilities include bank loans, notes payable, accounts payable, outstanding expenses payable.

Assets: Assets are the resources available to the business from which it will derive future economic benefits. Examples of asset are Land, Building, Plant and Machinery, Cash, Accounts Receivable, Prepaid expenses, Inventory.

Revenue: Revenue means the income generated from sale of goods or services. There may be other revenues also like rent received, Interest, Royalties and fees. Revenues would imply an inflow of cash or assets into the business

Expense: Expenses mean the costs incurred in carrying out the operations of the business during a specified period. Expenses involve outflow of cash or assets out of the business.

To classify:

The given accounts in desired categories.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Write down as many descriptions describing rock and roll that you can. From these descriptions can you come up with s denition of rock and roll? What performers do you recognize? What performers don’t you recognize? What can you say about musical inuence on these current rock musicians? Try to break these inuences into genres and relate them to the rock musicians. What does Mick Jagger say about country artists? What does pioneering mean? What kind of ensembles w

Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's expenses, Gross margin, and Net income?

Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's assets, Liabilities, and Equity?