Accounting is a service activity. Its function is to provide information primarily financial in nature that is useful in making economic decisions.

The SFP provides readers with the information as to the company’s result of operations as of specified date.

Assets = Liabilities + Owners Equity is the governing equation of income statement.

Asset is an element of the SFP that has a normal credit balance.

The major elements of the SCI are income and expenses.

Revenues are transactions that decrease assets and/or increase liabilities leading to the decrease in equity.

Operating expenses refers to all other expenses related to the operations of the business other than cost of sales.

Gains are income derived from other activities of the business.

The Statement of Management’s Responsibility states that the company’s management is responsible for the information content on the financial statements.

The SCI is a snapshot of the financial position of the company.

Assets are resources that are within the control of the company and have future benefits.

Receivables are assets that pertain to the company’s right to collect or right to claim payments.

Balance Sheet reports the resources available for the company to use, obligations that the company is required to pay and equity that belongs to the owner of the company.

Prepaid expense is an asset account that refers to future expenses paid in advance.

Liabilities and equity have normal balances of credit.

Classify the following as to A (assets), L (liabilities), C (capital), R (revenue) and E (expenses) - ACCOUNTS RECEIVABLES

Classify the following as to A (assets), L (liabilities), C (capital), R (revenue) and E (expenses) - ACCUMULATED DEPRECIATION - BUILDING

Classify the following as to A (assets), L (liabilities), C (capital), R (revenue) and E (expenses) - ADVERTISING EXPENSE

Classify the following as to A (assets), L (liabilities), C (capital), R (revenue) and E (expenses) - AMORTIZATION EXPENSE

Classify the following as to A (assets), L (liabilities), C (capital), R (revenue) and E (expenses) - BAD DEBTS EXPENSE

Classify the following as to A (assets), L (liabilities), C (capital), R (revenue) and E (expenses) - BUILDING

Classify the following as to A (assets), L (liabilities), C (capital), R (revenue) and E (expenses) - COPYRIGHTS

Classify the following as to A (assets), L (liabilities), C (capital), R (revenue) and E (expenses) - DELIVERY EXPENSE

Classify the following as to A (assets), L (liabilities), C (capital), R (revenue) and E (expenses) - DEPRECIATION EXPENSE - BUILDING

Classify the following as to A (assets), L (liabilities), C (capital), R (revenue) and E (expenses) - GAS AND OIL EXPENSE

Classify the following as to A (assets), L (liabilities), C (capital), R (revenue) and E (expenses) - LEASEHOLD IMPROVEMENTS

Classify the following as to A (assets), L (liabilities), C (capital), R (revenue) and E (expenses) - MACHINERY

Classify the following as to A (assets), L (liabilities), C (capital), R (revenue) and E (expenses) - MERCHANDISE INVENTORY

Classify the following as to A (assets), L (liabilities), C (capital), R (revenue) and E (expenses) - OFFICE EQUIPMENT

Classify the following as to A (assets), L (liabilities), C (capital), R (revenue) and E (expenses) - OFFICE SUPPLIES EXPENSE

Classify the following as to A (assets), L (liabilities), C (capital), R (revenue) and E (expenses) - OWNERS' CAPITAL

Classify the following as to A (assets), L (liabilities), C (capital), R (revenue) and E (expenses) - PATENTS

Classify the following as to A (assets), L (liabilities), C (capital), R (revenue) and E (expenses) - PREPAID INSURANCE

Classify the following as to A (assets), L (liabilities), C (capital), R (revenue) and E (expenses) - RENT EXPENSE

Classify the following as to A (assets), L (liabilities), C (capital), R (revenue) and E (expenses) - SALES