Identify the correct classification for the following 4 ledger accounts in the chart of accounts:
1.prepaid insurance
2.accrued wages
3.Depreciation
4.cost of goods sold
A)1 expense, 2 liability, 3 expense, 4 expense
B)1 asset, 2 liability, 3 expense, 4 expense
C)1 asset, 2 liability, 3 expense, 4 asset
D)1 asset, 2 liability, 3 liability, 4 revenue.

Question

Quizplus · Accepted Answer

1. Prepaid insurance is an asset account as it represents an expense paid in advance.
2. Accrued wages is a liability account as it represents wages that have been earned but not yet paid.
3. Depreciation is an expense account as it represents the decrease in value of a long-term asset over time.
4. Cost of goods sold is an expense account as it represents the direct cost of producing goods sold by the company.

Identify the Correct Classification for the Following 4 Ledger Accounts