Sample Problems and exercises

1. Classify the following balance sheet accounts as current or non-current accounts:

a) Retained earnings – non-current accounts
b) Accounts payable – current accounts
c) Prepaid expense – current accounts
d) Inventory – current accounts
e) Marketable securities – current accounts
f) Bonds payable – non-current accounts
g) Accrued wage payable – non-current accounts
h) Accounts receivable – current accounts
i) Capital lease liability – non-current accounts
j) Notes payable – non-current accounts

2. Arrange the following income statement accounts so they are in proper order of an
income statement:

a. Taxes payable Sales

b. Gross profit Cost of goods sold
c. Shares outstanding Gross profit
d. Earnings per share Selling & administrative expense
e. Interest expense Depreciation expense
f. Earnings before tax Operating profit
g. Depreciation expense Interest expense
h. Cost of goods sold Earnings before tax
i. Preferred stock dividends Taxes payable
j. Earnings after tax Earnings after tax
k. Operating profit Preferred stock dividends
l. Earnings available to common Earnings available to common
stockholders stockholders
m. Sales Shares outstanding
n. selling & administrative Earnings per share
expense

3. Financial statement account identification

Indicate if the following are balance sheet accounts or income statement accounts. If balance
sheet, identify the type of account as to asset (A), liability (L) or stockholders equity (SHE)
 ACCOUNT TITLES FINANCIAL TYPE OF ACCOUNT
STATEMENT
1. accounts payable Balance Sheet accounts L
2. accounts receivable Balance Sheet accounts A
3. accruals Balance Sheet accounts L
4. accum. Depreciation Balance Sheet accounts A
5. admin.expense Income statement L
accounts
6. buildings Balance Sheet accounts A
7. cash Balance Sheet accounts A
8. common stock at par Balance Sheet accounts SHE
9. cost of goods sold Income statement A
accounts
10.depreciation expense Income statement L
accounts
11.equipment Balance Sheet accounts A
12.general expense Income statement L
accounts
13.interest expense Income statement L
accounts
14.inventories Balance Sheet accounts A
15.land Balance Sheet accounts A
16.machinery Balance Sheet accounts A
17.marketable securities Balance Sheet accounts A
18.mortgaged payable Balance Sheet accounts L
19.notes payable Balance Sheet accounts L
20.operating expense Income statement L
accounts
21.paid in capital Balance Sheet accounts SHE
22.preferred stock Balance Sheet accounts SHE
23.preferred stock dividends Income statement SHE
accounts
24.retained earnings Balance Sheet accounts SHE
25.sales Income statement SHE
accounts
26.selling expense Income statement L
accounts
27.taxes Income statement L
accounts
28.vehicles Balance Sheet accounts A