Multiple Choice
Which type of firm provides services such as accepting deposits and providing loans to its customers?
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1. Introduction to Accounting
Types of Accounting
Struggling with Financial Accounting?
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Which of the following accounts is classified as a stockholders' equity account?
A
Equipment
B
Accounts Payable
C
Common Stock
D
Prepaid Expenses
Verified step by step guidance1
Understand the concept of stockholders' equity: Stockholders' equity represents the owners' claim to the assets of a corporation after all liabilities have been deducted. It includes accounts such as Common Stock, Retained Earnings, and Additional Paid-In Capital.
Review the provided options: Equipment, Accounts Payable, Common Stock, and Prepaid Expenses.
Classify each account: Equipment is an asset account, Accounts Payable is a liability account, Prepaid Expenses is an asset account, and Common Stock is a stockholders' equity account.
Identify the correct classification: Since Common Stock represents ownership in the company and is part of stockholders' equity, it is the correct answer.
Conclude that Common Stock is the account classified as stockholders' equity based on its definition and classification.
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