Classification of Accounts

Normal
Account Title Account Classification Financial Statement
Balance
A
Accounts Payable Current Liability Balance Sheet Credit
Accounts Receivable Current Asset Balance Sheet Debit
Accumulated Depreciation - Buildings Plant Asset - Contra Balance Sheet Credit
Accumulated Depreciation – Equipment Plant Asset - Contra Balance Sheet Credit
Accumulated Depletion Plant Asset - Contra Balance Sheet Credit
Accumulated Amortization Intangible Asset - Contra Balance Sheet Credit
Advertising Expense Operating Expense Income Statement Debit
Allowance for Doubtful Accounts Current Asset – Contra Balance Sheet Credit
Amortization Expense Operating Expense Income Statement Debit
B
Bad Debt Expense Operating Expense Income Statement Debit
Bonds Payable Long-Term Liability Balance Sheet Credit
Buildings Plant Asset Balance Sheet Debit
C
Cash Current Asset Balance Sheet Debit
Common Stock Stockholder’s Equity Balance Sheet Credit
Copyrights Intangible Asset Balance Sheet Debit
Cost of Goods Sold Cost of Goods Sold Income Statement Debit
D
Depletion Expense Operating Expense Income Statement Debit
Depreciation Expense Operating Expense Income Statement Debit
Long-Term Liability –
Discount on Bonds Payable Balance Sheet Debit
Contra
Temporary Account
Retained Earnings
Dividends closed to Retained Debit
Statement
Earnings
Dividend Income Other Income Income Statement Credit
Dividends Payable Current Liability Balance Sheet Credit
Donated Capital Stockholder’s Equity Balance Sheet Credit
E
Equipment Plant Asset Balance Sheet Debit
Exchange Gain Other Income Income Statement Credit
Exchange Loss Other Expense Income Statement Debit
F
Freight-out Operating Expense Income Statement Debit
G
Gain on Disposal of Plant Assets Other Income Income Statement Credit
Gain on Sale of Investments Other Income Income Statement Credit
Goodwill Intangible Asset Balance Sheet Debit
 Normal
Account Title Account Classification Financial Statement
Balance
I
Temporary Account
Income Summary closed to Retained Not Applicable (1)
Earnings
Income Tax Expense Income Tax Expense Income Statement Debit
Income Tax Payable Current Liability Balance Sheet Credit
Insurance Expense Operating Expense Income Statement Debit
Interest Income / Interest Revenue Other Income Income Statement Credit
Interest Expense Other Expense Income Statement Debit
Interest Payable Current Liability Balance Sheet Credit
Interest Receivable Current Asset Balance Sheet Debit
Investment in Bonds Long-term Investment Balance Sheet Debit
Investment in Stock Long-term Investment Balance Sheet Debit
Investment in subsidiary Long-term Investment Balance Sheet Debit
Inventory Current Asset Balance Sheet (2) Debit
L
Land Plant Asset Balance Sheet Debit
Loss on Disposal of Plant Assets Other Expense Income Statement Debit
Loss on Redemption Bonds Extraordinary Item Income Statement Debit
Loss on Sale of Investments Other Expense Income Statement Debit
M
Maintenance & Repair Expense Operating Expense Income Statement Debit
Marketable Securities Current Asset Balance Sheet Debit
Materials Current Asset Balance Sheet Debit
Mortgage Payable Long-Term Liability Balance Sheet Credit
N
Current Liability / Long-
Notes Payable Balance Sheet Credit
Term Liability
Current Asset /
Notes Receivable Balance Sheet Debit
Investment
O
Organization Costs Intangible Asset Balance Sheet Debit
Owner’s Equity /
Owner’s Capital Owner’s Equity Credit
Balance Sheet
Temporary Account
Owner’s Drawings Owner’s Equity Debit
closed to Owner’s Capital
P
Patent Intangible Assets Balance Sheet Debit
Paid-in Capital in Excess of Par-Common
Stockholder’s Equity Balance Sheet Credit
Stock
Paid-in Capital in Excess of Par-Preferred
Stockholder’s Equity Balance Sheet Credit
Stock
Paid-in Capital from Sale of Treasury Stock Stockholder’s Equity Balance Sheet Credit
Preferred Stock Stockholder’s Equity Balance Sheet Credit
 Account Title Account Classification Financial Statement Normal
Balance
Pension Expense Operating Expense Income Statement Debit
Petty Cash Current Asset Balance Sheet Debit
Long-Term Liability –
Premium on Bonds Payable Balance Sheet Credit
Contra
Prepaid Insurance Current Asset Balance Sheet Debit
Prepaid Rent Current Balance Sheet Debit
Purchases Cost of Goods Sold Income Statement Debit
Purchase Discounts Cost of Goods Sold Income Statement Credit
Purchase Returns and Allowances Cost of Goods Sold Income Statement Credit
R
Rent Expense Operating Expense Income Statement Debit
Rent Income Other Income Income Statement Credit
BS / Retained
Retained Earnings Stockholder’s Equity Credit
Earnings Statement
S
Salaries and Wages Expense Operating Expense Income Statement Debit
Salaries and Wages Payable Current Liability Balance Sheet Credit
Sales Revenue Revenue Income Statement Credit
Sales Discounts Revenue – Contra Income Statement Debit
Sales Returns and allowances Revenue – Contra Income Statement Debit
Sales Tax Payable Current Liability Balance Sheet Credit
Selling Expense Operating Expense Income Statement Debit
Service Revenue Revenue Income Statement Credit
Sinking Fund Cash Investment Balance Sheet Debit
Sinking Fund Investment Investment Balance Sheet Debit
Short-term Investment Current Asset Balance Sheet Debit
Retained Earnings
Stock Dividends Stockholder’s Equity Debit
Statement
Stock Dividends Distributable Stockholder’s Equity Balance Sheet Credit
Supplies Current Asset Balance Sheet Debit
Supplies Expense Operating Expense Income Statement Debit
T
Transportation in (Freight-in) Cost of goods sold Income Statement Debit
Treasury Stock Stockholder’s Equity Balance Sheet Debit
U
Uncollectible Accounts Expense Operating Expense Income Statement Debit
Unearned Service Revenue Current Liability Balance Sheet Credit
Unearned Rent Current Liability Balance Sheet Credit
Utilities Expense Operating Expense Income Statement Debit

(1) The normal balance for Income Summary will be credit when there is a net income, debit when there is net loss.
The Income Summary account does not appear on any financial statement.
(2) If a periodic system is used, Inventory also appears on the income statement in the calculation of cost of goods
sold.
The following is a sample of chart of accounts. It does not represent a comprehensive chart of all the accounts used in
this textbook but rather those accounts that are commonly used. This sample chart of accounts is for a company that
generates both service revenue as well as sales revenue. It uses the perpetual approach to inventory. If a periodic
system was used, the following temporary accounts would be needed to record inventory purchases; Purchases;
Freight-in; Purchase Returns and Allowances; and Purchase Discounts.

CHART OF ACCOUNTS
ASSETS LIABILITIES OWNER’S AND REVENUES EXPENSES
STOCKHOLDER’S
EQUITY
Cash Notes Payable Owner’s Capital Service Revenue Advertising Expense
Accounts Receivable Accounts Payable Owner’s Drawing Sales Revenue Amortization
Expense
Allowance for Unearned Service Common Stock Sales Discounts Bad Debt Expense
Doubtful Accounts Revenue
Interest Receivable Salaries and Wages Paid-in Capital Excess Sales Returns and Cost of Goods Sold
Payable of Par-Common Allowances
Stock
Inventory Unearned Rent Preferred Stock Interest Revenue Depreciation
Revenue Expense
Supplies Interest Payable Paid-in Capital Excess Gain on Disposal of Freight-out
of Par-Preferred Plant Asset
Stock
Prepaid Insurance Dividends Payable Treasury Stock Rent Revenue Income Tax Expense
Prepaid Rent Income Tax Payable Retained Earnings Insurance Expense
Land Bonds Payable Dividends Interest Expense
Equipment Discounts of Bond Income Summary Loss on Disposal of
Payable Plant Asset
Accumulated Premium on Bonds Maintenance and
Depreciation – Payable Repair Expense
Equipment
Buildings Mortgage Payable Rent Expense
Accumulated Salaries and Wages
Depreciation – Expense
Buildings
Copyrights Supplies Expense
Goodwill Utilities Expense
Patents