Solution for Financial Accounting: The Impact on Decision Makers 7th Edition Chapter 3, Problem 2

by Gary A. Porter, Curtis L. Norton
315 Solutions 13 Chapters 30791 Studied ISBN: 9781439080528 Finance 5 (2)

Chapter 3, Problem PA 2 : LO 4 Accounts In-class exercise: Chart...

LO 4 Accounts

In-class exercise: Chart of Accounts

Have the students choose a business and develop a chart of accounts for the business. Then ask them to assign a number to each account.

Step-By-Step Solution

LO 4


The solution will vary based on the business students choose. Stress that some accounts are common to all business, while others are unique to a particular type of business. However, every company will have assets, liabilities, equity, revenues and expenses. The numbering system used in the text uses accounts starting with 1 for assets, 2 for liabilities, 3 for equity, 4 for revenues and 5 for expense account. Also explain to the students that the numbering system is flexible, but by using this type of system, you can look at the account number and immediately know what type of account it is.

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