Which list of accounts below identifies only accounts that would appear on a classified balance sheet?

• A. Prepaid Rent, Interest Expense, Common Stock, Dividends
• B. Inventory, Service Revenue, Salaries Expense, Notes Payable
• C. Cash, Accounts Receivable, Equipment, Accounts Payable
• D. Sales Revenue, Cash, Utilities Expense, Retained Earnings

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the concept of a classified balance sheet. A classified balance sheet organizes assets, liabilities, and equity into subcategories to provide more detailed information. Common categories include Current Assets, Non-Current Assets, Current Liabilities, Non-Current Liabilities, and Equity.
2. Step 2: Identify the types of accounts that typically appear on a classified balance sheet. These include accounts such as Cash, Accounts Receivable, Inventory, Equipment (assets), Accounts Payable, Notes Payable (liabilities), and Equity accounts like Common Stock and Retained Earnings.
3. Step 3: Analyze each list of accounts provided in the problem. Determine whether the accounts in each list fit into the categories of a classified balance sheet. For example, Prepaid Rent is a Current Asset, but Interest Expense and Dividends are not balance sheet accounts—they belong to the income statement or statement of retained earnings.
4. Step 4: Evaluate the correct answer provided: 'Cash, Accounts Receivable, Equipment, Accounts Payable.' These accounts fit into the classified balance sheet categories: Cash and Accounts Receivable are Current Assets, Equipment is a Non-Current Asset, and Accounts Payable is a Current Liability.
5. Step 5: Compare the correct answer to the other options. Ensure that none of the other lists contain only accounts that belong on a classified balance sheet. For example, Sales Revenue and Utilities Expense are income statement accounts, not balance sheet accounts.