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Classification of Accounts

For each of the accounts listed,Classification of Accounts indicate whether it is an asset (A), a liability (L), or an owners’ equity (OE) account. If it is an account that affects owners’ equity, indicate whether it is a revenue (R) or expense (E) account.

1. Cash

2. Sales

3. Accounts Receivable

4. Cost of Goods Sold

5. Insurance Expense

6. Capital Stock

7. Mortgage Payable

8. Salaries and Wages

Expense

9. Retained Earnings

10. Salaries Payable

11. Accounts Payable

12. Interest Revenue

13. Inventory

14. Interest Receivable

15. Notes Payable

16. Equipment

17. Office Supplies

18. Utilities Expense

19. Interest Payable

20. Rent Expense

Exercise 15-24 (Ch. 15) of Accounting Concepts and Applications

 

Cost Classifications

The following are costs associated with manufacturing firms, merchandising firms, or service

firms:

a. Legal services for an accounting firm

b. Car leases for company management

c. Oil used to service manufacturing equipment

d. Office supplies for a grocery store

e. Entertainment expense for clients

f. Travel expenses for doctors in a medical firm

g. Plastic used in making computers

h. Collection costs of accounts receivable

i. Electricity to run saws at a lumber yard

j. Food for a company banquet

k. Advertising expense

l. Continuing education for a doctor

m. Commissions paid to salespersons

n. Depreciation on sports equipment by a professional football team

o. Calculators used by office employees

p. Fuel used in baggage transporters at an airport

q. Toll charges incurred because of business travel

r. Fuel used in manufacturing equipment

Classify the costs as (1) product or period; (2) variable or fixed; and (3) for those that are

product costs, as direct materials, direct labor, or manufacturing overhead. Write “not applicable

(N/A)” if a category doesn’t apply.