Chapter 2: 6BE (page 64)
Question: For each item below, indicate to which category of elements of financial statements it belongs.
(a) Retained earnings (f) Loss on sale of equipment
(b) Sales (g) Interest payable
(c) Additional paid-in capital (h) Dividends
(d) Inventory (i) Gain on sale of investment
(e) Depreciation (j) Issuance of common stock
Short Answer
The category to which the elements of financial statements belong are:
Retained earnings belongs to equity.
Sales belong to revenues.
Additional paid-in capital belongs to equity.
Inventory belongs to assets.
Depreciation belongs to expenses.
Loss on sale of equipment belongs to losses.
Interest payable belongs to liabilities.
Dividends belong to distribution to owners.
Gain on sale of investment belong to gains.
Issuance of common stock belongs to investment by owners.