Purpose: (L.O. 8) This exercise will give you practice in classifying items on financial statements

1. Cash

21. Commission revenue

2. Accounts payable

22. Insurance expense

3. Equipment

23. Rent expense

4. Utilities expense

24. Rent revenue

5. Common stock

25. Interest expense

6. Salaries and wages payable

26. Interest revenue

7. Salaries and wages expense

27. Interest income

8. Advertising expense

28. Office supplies expense

9. Advertising payable

29. Audit fees incurred

10. Office supplies

30. Service revenue

11. Note payable

31. Legal fees earned

12. Note receivable

32. Legal fees incurred

13. Dividends

33. Prepaid insurance

14. Fees earned

34. Property tax expense

15. Fees incurred

35. Mortgage payable

16. Telephone expense

36. Loan receivable

17. Cleaning supplies on hand

37. Bank loan payable

18. Property taxes payable

38. Royalty revenue

19. Cleaning expense

39. Royalty expense

20. Commission expense

40. Medical supplies


Indicate how each of the above should be classified on a set of financial statements. Use the following abbreviations to communicate your responses.


Asset on the balance sheet


Liability on the balance sheet


Stockholders’ equity balance on the balance sheet


Dividends on the retained earnings statement


Revenue on the income statement


Expense on the income statement