Which of the following is a shareholders’ equity account on a classified balance sheet?

• A. Accounts payable
• B. Common stock
• C. Prepaid insurance
• D. Unearned revenue

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the components of a classified balance sheet, which typically includes assets, liabilities, and shareholders' equity sections.
2. Step 2: Identify the nature of each account listed: Accounts payable is a liability, Prepaid insurance is an asset, Unearned revenue is a liability, and Common stock is part of shareholders' equity.
3. Step 3: Recall that shareholders' equity represents the owners' claims on the company's assets after liabilities are deducted, and common stock is a primary component of this section.
4. Step 4: Confirm that common stock appears under the shareholders' equity section on the classified balance sheet, distinguishing it from liabilities and assets.
5. Step 5: Conclude that among the options given, common stock is the correct shareholders' equity account.