For each of the following items, indicate to which category of elements of financial statements it belongs: (a) Accounts Receivable, (b) Service Revenue, (c) Salaries Expense, (d) Retained Earnings. Which of the following correctly matches each item to its category?A. (a) Asset, (b) Revenue, (c) Expense, (d) EquityB. (a) Liability, (b) Asset, (c) Revenue, (d) ExpenseC. (a) Equity, (b) Expense, (c) Asset, (d) LiabilityD. (a) Revenue, (b) Liability, (c) Equity, (d) Asset

• A. B. (a) Liability, (b) Asset, (c) Revenue, (d) Expense
• B. C. (a) Equity, (b) Expense, (c) Asset, (d) Liability
• C. A. (a) Asset, (b) Revenue, (c) Expense, (d) Equity
• D. D. (a) Revenue, (b) Liability, (c) Equity, (d) Asset

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the categories of financial statement elements. These include Assets, Liabilities, Equity, Revenue, and Expenses. Each item in the problem needs to be matched to one of these categories based on its nature.
2. Step 2: Analyze 'Accounts Receivable'. Accounts Receivable represents amounts owed to the company by customers for goods or services provided on credit. This is classified as an Asset because it is a resource controlled by the company that will provide future economic benefits.
3. Step 3: Analyze 'Service Revenue'. Service Revenue represents income earned from providing services. This is classified as Revenue because it increases the company's equity through earnings from operations.
4. Step 4: Analyze 'Salaries Expense'. Salaries Expense represents the cost incurred by the company for paying employee salaries. This is classified as an Expense because it decreases the company's equity through costs incurred during operations.
5. Step 5: Analyze 'Retained Earnings'. Retained Earnings represent the accumulated net income of the company that has been retained rather than distributed as dividends. This is classified as Equity because it is part of the ownership interest in the company.