GAAP classifies items on the balance sheet in one of the following ways:
Asset (A)
Liability (L)
Shareholders’ equity (SE)
Item that would not appear on the balance sheet as conventionally prepared under GAAP. (N/A)
Using the abbreviations, indicate the appropriate classification of each of the following tems. If you can find no basis in the chapter for giving an answer, then speculate.
a. Preferred stock
b. Furniture and fixtures
c. Potential liability under lawsuit (case has not yet gone to trial); attorneys estimate 40% chance of losing a material amount.
d. Prepaid rent
e. Capital contributed in excess of par value
f. Cash on hand
g. Goodwill
h. Estimated liability under warranty contract
i. Raw materials inventory
j. Rental fees received in advance
k. Bonds payable
l. Prepaid insurance
m. Income taxes payable
n. Treasury stock