Multiple Choice
Which of the following items are shown on a classified balance sheet? Select the three that apply.
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2. Transaction Analysis
Classified Balance Sheet Components
Multiple Choice
In a classified balance sheet, which of the following accounts appears as a current asset?
A
Unearned revenue
B
Service revenue
C
Accumulated depreciation—equipment
D
Accounts receivable (net)
Verified step by step guidance1
Step 1: Understand the classification of assets on a classified balance sheet. Current assets are assets expected to be converted into cash, sold, or consumed within one year or the operating cycle, whichever is longer.
Step 2: Review each account to determine if it meets the criteria of a current asset. Unearned revenue is a liability, representing money received before services are performed.
Step 3: Service revenue is an income statement account, not an asset, so it does not appear on the balance sheet as a current asset.
Step 4: Accumulated depreciation—equipment is a contra-asset account related to long-term assets, so it is not classified as a current asset.
Step 5: Accounts receivable (net) represents amounts owed by customers expected to be collected within the operating cycle, making it a current asset on the classified balance sheet.
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